Most of the Financial Intermediary NGOs (FINGOs) licensed by the Nepal Rastra Bank (NRB) are mulling over the merger option after the central bank came up with a policy to convert FINGOs into ´D´ class micro-financial institution.
According to a source at Micro-Finance Promotion and Supervision Department of NRB, FINGOs are preparing to merge with the bigger institution as most of them do not meet the capital requirement of Rs 10 million for ´D´ class micro-financial institution.
“We have provided the option of merger to FINGOs who do not have the required capital to convert into ´D´ class micro financial institutions,” the source said.
In its Monetary Policy for fiscal year 2013/14, NRB has said a provision will be made for FINGOs to covert into ´D´ class micro-finance institution by mid-July 2015.NRB spokesperson Bhaskar Mani Gyawali told Republica that the central bank had asked FINGOs to furnish their upgradation plan by mid-July 2015. Gyawali warned that NRB will scrap license of FINGOs that fail to convert into ´D´ class institution.
A total of 31 FINGOs are serving in 50 districts across the country at present.
Though NRB has planned to upgrade these FINGOs into ´D´ class institutions, some of these organizations lament that the essence of social service for the poor and low-income clients would be ´compromised´ if they are converted into ´D´ class institution. “Once a FINGO is converted into a financial institution, they will have to shift their service orientated motivation to profit making business,” a leader of a FINGO told Republica requesting anonymity.
Chandi Raj Dhakal, chairman of Chartare Yuwa Club - a Baglung-based FINGO, said NRB should introduce a new policy to retain the service-oriented essence of the microfinance institution. “The upgradation policy is a welcome step. But it should also introduce a policy to bar sale of shares of these institutions to people not served by FINGOs,” he added.
Rudra Prasad Dahal, program coordinator of Microfinance Association Nepal (MIFAN) -- an umbrella organization representing 24 FINGOs, said NRB´s move to convert FINGOs into ´D´ class micro-finance institutions will make FINGOs more profit-oriented. “After being converted into a ´D´ class financial institution, FINGOs will have to pay taxes like commercial and development banks as well as distribute dividends to the investors. Ultimately, it will require them to be more profit-oriented,” he argued, adding that the MIFAN has asked NRB to maintain status-quo on FINGOs.
source: republica,19 jan 2014
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According to a source at Micro-Finance Promotion and Supervision Department of NRB, FINGOs are preparing to merge with the bigger institution as most of them do not meet the capital requirement of Rs 10 million for ´D´ class micro-financial institution.
“We have provided the option of merger to FINGOs who do not have the required capital to convert into ´D´ class micro financial institutions,” the source said.
In its Monetary Policy for fiscal year 2013/14, NRB has said a provision will be made for FINGOs to covert into ´D´ class micro-finance institution by mid-July 2015.NRB spokesperson Bhaskar Mani Gyawali told Republica that the central bank had asked FINGOs to furnish their upgradation plan by mid-July 2015. Gyawali warned that NRB will scrap license of FINGOs that fail to convert into ´D´ class institution.
A total of 31 FINGOs are serving in 50 districts across the country at present.
Though NRB has planned to upgrade these FINGOs into ´D´ class institutions, some of these organizations lament that the essence of social service for the poor and low-income clients would be ´compromised´ if they are converted into ´D´ class institution. “Once a FINGO is converted into a financial institution, they will have to shift their service orientated motivation to profit making business,” a leader of a FINGO told Republica requesting anonymity.
Chandi Raj Dhakal, chairman of Chartare Yuwa Club - a Baglung-based FINGO, said NRB should introduce a new policy to retain the service-oriented essence of the microfinance institution. “The upgradation policy is a welcome step. But it should also introduce a policy to bar sale of shares of these institutions to people not served by FINGOs,” he added.
Rudra Prasad Dahal, program coordinator of Microfinance Association Nepal (MIFAN) -- an umbrella organization representing 24 FINGOs, said NRB´s move to convert FINGOs into ´D´ class micro-finance institutions will make FINGOs more profit-oriented. “After being converted into a ´D´ class financial institution, FINGOs will have to pay taxes like commercial and development banks as well as distribute dividends to the investors. Ultimately, it will require them to be more profit-oriented,” he argued, adding that the MIFAN has asked NRB to maintain status-quo on FINGOs.
source: republica,19 jan 2014
LINK
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