Kathmandu, Feb. 17
Finance Minister Dr.
Prakash Sharan Mahat has said that microfinance has enhanced people’s access to
finance in remote areas.
Speaking at the fourth
National Microfinance Members Conference that kicked off in Kathmandu on
Saturday, he said, "The microfinance sector has supported the
underprivileged, poor and women of Nepal and also played an important role in livelihood
enhancement.”
However, he said that the
recent problems in the microfinance institutions (MFIs) have been a matter of
concern for everyone. "It has been seen that interest groups are trying to
mislead people by showing some problems. We will never allow those who try to
politicize a good business sector like microfinance to succeed," FM Dr. Mahat
said.
According to him, it is a
dangerous tendency to incite people for the non-payment of debts. The
government will not remain silent, and all stakeholders, including the
companies and members, should collaborate to defeat such forces.
FM Dr. Mahat also urged
common debtors not to be under the illusion that they need not pay their debts.
"The loan taken from the depositors' savings is never waived. Instead, the
government is ready to facilitate in the repayment process. Debt must be paid,"
he said.
He also urged that
microfinance should not be taken as a profit-making tool but should focus on
rural development, small enterprise promotion and self-employment.
Likewise, Acting Governor
of the Nepal Rastra Bank, Dr. Neelam Dhungana Timsina praised the role played
by microfinance in a country where about 21 per cent of the population is out
of the access to formal financing options.
According to her, even
though the government has brought various programmes for inclusive development,
desired success has not been achieved, and it was the microfinance that
supported in the drive.
Expressing concerns over
the recent problems in the MFIs, Dhungana suggested that everyone should work
responsibly to prevent the situation from worsening. Problem has aggravated
with the current 6 per cent non-performing loans.
In the programme, the
chairman of the organizing committee, Shankar Man Shrestha, said that the
recent problems in microfinance are the weaknesses of the MFIs. They began to
act like a profit making company and try to increase profits to distribute
dividend. As a result, this sector was flooded with profit-seeking investors,
Shrestha said and added that it was a big mistake not to make members of
microfinance as shareholders.
"There was
negligence even while disbursing the loan, the government opened license anew and
there was even more distortion and deviation along with unhealthy competition.
Companies were competing in luring the investors and interest rates were
treated as a tool for profit.”
Ram Bahadur Yadav, President
of Nepal Microfinance Backers Association, complained that the government has
neglected the microfinance sector which is promoting investment and enterprise
along with financial awareness in the villages through nearly 6 million
members.
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