Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB) has introduced a new provision to provide relief to microfinance institutions (MFIs) doing wholesale business.
The central bank has brought a new provision by amending the integrated directive issued in the name of microfinance institutions. The Nepal Rastra Bank (NRB) has introduced a provision that there will be no obstruction in the merger or acquisition of retail microfinance institutions for 5 years.
As per the amended provision, a microfinance institution will have to operate only as a microfinance financial institution doing retail business if it conducts integrated transactions by participating in the process of merger and acquisition between the wholesale loan provider microfinance financial institution and the microfinance financial institution doing retail business. Provided that, this provision shall not be deemed to have prevented ÷the wholesale lending for 5 years from the date of commencement of integrated transaction by participating in the merger and acquisition process.
As per the earlier directive, a microfinance financial institution can operate as a microfinance financial institution carrying out retail transaction if it participates in the process of merger and acquisition of a microfinance institution providing wholesale loans. However, in the case of the loan issued by the wholesale lending provider microfinance financial institution before merger and receipt, this provision would not be deemed to have prevented the recovery of the loan as per the previous payment schedule.
