New monetary policy makes stakeholders upbeat about BFIs and MFIs
ShareSansar, July 20:
As the market is opening for the first time following the announcement of the new monetary policy, Key stakeholders are upbeat about surge in the price of scrips especially of the microfinance and BFI groups.
“The best part of the monetary policy is that the central bank simply does not have any reason to tightly control marginal lending or investment of BFIs in the stock market,” says President of the Stock Brokers’ Association Narendra Sijapati. “The marginal lending of commercial banks is less than 2 percent of its total loan mobilization. Now, that is a nominal figure if we take into account the excess liquidity in the system.”
Sijapati further said that the strong indication from the central bank that it is very strict when it comes to paid-up capital requirement is going to see a huge rise in the price of scrips of the commercial banks that are yet to shore up their paid-up capital to Rs 2 arba.
“This surge is also expected to lift most of the scrips of the BFI,” he added. “And then we all know that the series of measures in the monetary policy is going to send the microfinance companies to a new high.”
Sijapati, however, was somewhat apprehensive about the growth of hydropower sector, especially in the wake of the ongoing management crisis in Chilime Hydropower Company Limited.
Chairperson of Nepal Investors Forum Raj Kumar Timilsina also echoes Sijapati’s optimism.
“The monetary policy did not tighten the marginal lending to the extent we had anticipated. It simply did not have enough reasons to do so,” he said. “All the central bank can do is fix the percent on marginal lending, and it cannot be very low due to the liquidity surplus. This will not have much impact on the market. All in all, we are excited about the market.”
He further said that the reason he feels that the good days are on the card, especially for the BFIs and MFIs.
Timilsina adds, “The central bank is serious about enforcing BASEL III, especially about the paid-up capital requirement. It has also announced other measures to promote corporate good governance and financial health of the BFIs. What more can you ask for at this point?”
The monetary policy has stated the central bank will come up with a provision for the microfinance institutions operating in districts in financial hubs will have to raise their paid-up capital within this fiscal year.
Now the class ‘D’ MFIs can issue loan on zero interest rate up to Rs 30 lakh from the existing provision of Rs 20 lakh if they open new branch in the district less accessible from financial point of view. MFIs do not even have to seek prior permission from the central bank to open such branches.
To further promote the MFIs, the monetary policy has now allowed the MFIs to issue up to Rs 2 lakh to good credit from the deprived class from the existing 1.5 lakh, and to increase the microcredit loan from Rs 4 lakh to Rs 5 lakh.
On the other hand, the percentage of the loan given to the MFIs by the BFIs has not been changed.
