MFIs pledge to consult customers to improve services

Kathmandu, Aug. 23

Nepal Microfinance Bankers' Association (NMBA) has said that they are ready for open discussion with the customer members and their representatives about the shortcomings, human errors or aspects to be improved by microfinance institutions (MFIs) while extending services and other programmes.

A conference of the chief executive officers of the MFIs held the other day in Dhulikhel, Kavre has said in a declaration that they are ready to implement reforms in the sector in coordination with the concerned stakeholders. This declaration has come in the wake of organised protests against the MFIs as ‘orchestrated’ by a group.

It has decided to request the Nepal Rastra Bank (NRB) to take necessary actions such as issuing notices to discourage such protests that are being carried out in the name of agitation by the illegally formed committee to fight against the MFIs.

"It has made difficult for the MFIs to provide microfinance services smoothly," read the declaration.

According to President of NMBA, Prakash Raj Sharma, the conference was organised to identify the policy and operational problems in microfinance sector and create a common opinion about the solution measures.

"This gathering regrets the misleading accusations, illegal and chaotic movement made by some vested interests against the entire microfinance financial institutions in the name of Struggle Committee against microfinance with the aim of defaming the sector and hindering access to finance while ignoring the role and contribution of microfinance institutions," read the declaration.

The association has   asked the NRB and Ministry of Home Affairs to check such activities, and, in response, the MoHA had asked all district administration offices to take necessary actions against the struggle committee.

According to the declaration, the MFIs have agreed that only three MFIs will mobilise loans to one customer, in order to prevent distortions caused by multiple loans and loans exceeding capacity.

A better monitoring will also be carried out to ensure that the borrower has invested the loan to the same business or activity that they had pledged.

Likewise, the conference gave emphasis to customer protection principles such as appropriate product design and delivery, prevention of over-indebtedness, transparency in information, fair and respectful treatment of clients, responsible pricing, privacy of client data and complaint resolution mechanism.

Meanwhile, the CEOs also agreed to hire employees only after consultation with the relevant microfinance institution, if they had to recruit one working in the sector.

Likewise, NMBA will keep the record of the employees dismissed due to irregularities and misconduct. 

Published in The Rising Nepal daily on 24 August 2022.