The Nepal Rastra Bank (NRB) has published a circular stating D class microfinance need to establish Client Protection Fund. This provision will be in effect from the current fiscal year.
As per the directive, Microfinance needs to maintain client protection fund where
- they need to deposit at least 1% of their net profit in that fund
- The microfinances proposing more than 20% dividend (cash and/or bonus) is required to deposit 25% of dividend above 20% in Client Protection Fund.
Below is the list of Microfinance that have been giving higher dividends (including proposed) for past two fiscal year. If they continue to offer these kinds of dividends next year, then they will be affected by the new circular from the NRB.
| |
Proposed for 2071/72 |
2070/71 |
| S.No |
Name |
Bonus Share % |
Cash Dividend % |
Bonus Share % |
Cash Dividend % |
| 1 |
Chhimek Laghubitta Bikas Bank Limited |
40 |
12.7 |
35 |
10 |
| 2 |
Diprox Development Bank |
50 |
2.63 |
35 |
15 |
| 3 |
Nerude Laghubita Bikas Bank Limited |
44 |
2.32 |
25 |
20 |
| 4 |
Nirdhan Utthan Bank Ltd. |
48.81 |
13.1 |
40 |
12.63 |
| 5 |
Rural Microfinance Development Centre Ltd. |
10 |
16.32 |
10 |
21.58 |
| 6 |
Summit Micro Finance Development Bank Ltd. |
41.72 |
2.19 |
26 |
12.95 |
| 7 |
Swabalamwan Bikash Bank |
42 |
10.63 |
46.5 |
23.5 |
| 8 |
Swarojgar Laghu Bitta Bikas Bank Ltd. |
34.2 |
1.8 |
27.39 |
20 |
Pundits of secondary market of Nepal are confident that this provision from the NRB will not have negative effect on the shares of microfinance. Few have argued that this provision will have positive effect on the share prices of microfinance as this provision strengthens the microfinance sector in Nepal
Expert Speak: How will NRB directive on dividend of microfinance effect the current share market
