Kathmandu. Microfinance institutions with more than 15 per cent non-performing loans will not be able to share dividends.
Nepal Rastra Bank (NRB) has amended the unified directive issued by microfinance institutions. Now, while declaring dividend, microfinance institutions have to distribute dividends within the limits set by the Rastra Bank based on the capital fund ratio after dividend distribution and the NPL of mid-July last year.
As per the revised guidelines, institutions with more than 12 per cent capital fund will be able to share 25 per cent dividend if they have 5 per cent NPL, 20 per cent if they have 5-10 per cent NPL and 10-15 per cent if they have NPL.
According to the revised directive, institutions with 10 to 12 percent capital fund will now be able to share 20 percent dividend, institutions with NPL of 5 to 10 percent will be able to distribute 15 percent dividend and those with 10 to 15 percent NPL will be able to distribute 10 percent dividend.
On the other hand, in the case of institutions with capital fund ratio of less than 8 to 10 percent, 15 percent if 5 percent NPL, 10 percent if there is NPL between 5 to 10 percent and 5 percent if there is npl above 10 to 15 percent.
According to the directive, notwithstanding anything contained in this point, if it is found that it has to take any basis other than capital fund and non-performing loans, then this bank can approve dividend in such a way that it is less than the limit prescribed in the mentioned schedule.
If the microfinance institution has to propose to distribute cash dividend, it will have to maintain a minimum capital fund ratio of 9 percent. Also, microfinance institutions with non-performing loan ratio of more than 15 percent will not be able to distribute dividends.
