Wave to open microfinance in Nepal as share prices soars

After Nepal Rastra Bank stopped giving the permission to open commercial banks, development banks and finance, interest towards opening microfinance has increased. There are 57 applications filed at Nepal Rastra Bank for approval to run microfinance. Nepal Rastra Bank has given permissions to establish microfinance as it will take financial services to the rural areas, but most of the companies want to open microfinance in city areas. A few years ago, there were huge lines to open commercial banks, development banks and finance companies. After Nepal Rastra Bank got pressure to give importance to the quality rather than quantity, it stopped issuing license to establish the commercial bank, development bank and finance companies. Trilochan Pangeni, Spokesperson of Nepal Rastra Bank said, “After Nepal Rastra Bank stopped issuing license to open banks, development banks and finance companies, interest toward opening microfinance companies has increased.” By the end of Mangsir of 2072 BS, there are a total of 190 bank and finance companies and these companies have 3984 branches. There are many banks and finance companies, but their investments are not in return oriented sectors. We need to increase the investments in the return oriented sectors, said Pangeni. Earlier when there was a wave of opening banks and finance companies, the shares of those sectors and hiked. Now, when the share price of microfinance sectors has hiked which has created a lot of interest among promoters get the permission to open a microfinance company. We need to find out the connection between the share prices and the establishment of the companies. More than two dozen non-government organization is preparing to get converted into microfinance company. The central bank had provided till poush to finance oriented, non-governmental organization to convert themselves into the microfinance. Because of earthquake, financial blocked and tension in terai regions, NRB is in process to extend the deadline. At present there are 42 microfinance companies. Source: Abhiyan