DCGC insures credits worth Rs 620 million
KATHMANDU, FEB 22 -
Deposit Insurance and Credit Guarantee Corporation (DCGC) has insured credits worth Rs 620 million that had gone to various sectors as of the first six months of the current fiscal year. The figure is almost half the total amount insured last fiscal year 2010-11, which was Rs 1.31 billion.
The DCCG, which is now focusing more on insuring deposits of banks and financial institutions, has long been involved in insuring credit that went to cattle rearing, priority sector lending (which has now been phased out), small and medium enterprises (SME) loans and micro-finance and deprived sector lending.
As of the first six months this year, it insured credit worth Rs 90 million that went to cattle rearing, Rs 270 million meant for the priority sector, Rs 10 million that went to SME and Rs 250 million meant for micro-finance and deprived sector lending.
“We have not ignored credit guarantee while focusing on deposit insurance,” said DCGC chairman Bhaskarmani Gnawali, who is also the Spokesperson of Nepal Rastra Bank (NRB). “We are reviewing our current credit guarantee schemes to make them more attractive.”
Despite the focus on deposit guarantee, insurance coverage in the four areas mentioned above had soared last year with credit coverage worth Rs 1.31 billion, up from the Rs 446.61 million a year ago, according to the annual report of the DCGC.
However, the fall in the priority sector lending coverage as a result of the phasing-out of the sector by the central bank a few years ago had resulted in the decline in the DCGC’s business.
“We used to guarantee credit worth more than Rs 4 billion under the priority sector. This has now gone down to RS 623.9 million,” said a DCGC official.
However, the coverage in the lending for priority sector grew last year as compared to the previous year when Rs 227 million was guaranteed.
The mandatory provision of deposit guarantee since the last fiscal came as a major setback, hitting business. According to the DCGC, 194 BFIs, including 31 commercial banks, 85 development banks, 74 finance companies and two micro finance institutions, have got their deposits worth Rs 194 billion insured by the DCGC. It is protecting savings of 6.92 million depositors.
The premium rate has been fixed at 20 paisa per Rs 100. As per the Deposit Insurance Bylaw-2010, the premium will not be refunded to member BFIs and those failing to maintain their capital adequacy ratio will have to pay an additional 10 paisa premium on a half-yearly basis.
Meanwhile, the DCGC is planning to increase the limit of guarantee for SME from the current Rs 3 million to Rs 5 million, according to DCGC officials. It has already upped the limit for cattle rearing to Rs 90,000 per person, from the earlier Rs 60,000. The guarantee amount in micro-finance and the deprived sector has also been increased to Rs 200,000 from the earlier Rs 150,000.
Source: Kantipur
