Governor Maha Prasad Adhikari Says, "Nepal's Banking Sector is Safe, Foreign Exchange Reserves & Current Account Deficit Are Also Improving"
Governor of Nepal Rastra Bank (NRB) has highlighted that Nepal's financial sector is safe while speaking about it. The financial industry is generally safe, according to a representative of the governor. "A small shock does not cause problems in the economy," he remarked.
Adhikari claimed that the balance sheet, foreign exchange reserves, and current account deficit are all improving. Adding further, while the relaxation in the real sector has created a difficult situation, the economy will gradually turn around in the days ahead.
The governor also mentioned that inflation is declining and added that more remittances are coming in. "More than Rs. 1 Kharba remittances have been received monthly from Mangsir to Falgun," he stated.
The governor's representative said that the current account deficit has significantly decreased. He noted that "foreign exchange reserves are in a convenient position. In the same event, the governor also implied the banks to have a positive attitude at work. He stated that "the interest rate is slightly higher, liquidity in the banking system is improving, and the base rate and the average interest rate of deposits are declining and that the capital sufficiency exceeds the required ratio”.
On the other hand, the governor of Nepal Rastra Bank (NRB), Maha Prasad Adhikari, has said categorically that the dividends of microfinance have been controlled as intended.
The governor made it known at a press conference held in Kathmandu today that some microfinance institutions are in poor condition and are not permitted to distribute more than 15 percent dividends in order to avoid collapsing in the future.
In the same event Adhikari specifically highlighted that the team of NRB has established a high-level committee to address the microfinance issue and significant reforms will be made in this sector. Further adding that the dividend limits would last till the new rules and regulations of microfinance operations were implemented.
Previously, NRB had permitted microfinance institutions (MFIs) to provide dividends of more than 20 percent under certain conditions.
Through amending a unified directive, NRB had asked the MFIs to maintain at least 50 percent of the dividend amount in their reserve funds, if the companies are to distribute dividends of more than 20 percent. The dividend could be both cash or bonus shares.
Now, the central bank is receptive to letting the MFIs operate while paying dividends to their shareholders. The maximum cash dividends that MFIs can now pay out in cash is 30% of their net distributable profits.
In a similar vein, MFIs were allowed to pay out cash dividends that did not exceed the weighted interest rates on their deposits. In the same way, MFIs would not be permitted to pay out cash dividends if their net distributable profit was less than 5% of their total paid-up capital.
