In a recent statement, Finance Minister Janardan Sharma encouraged microfinance institutions (MFIs) to lower the interest rates they are now charging on loans. MFOIs all throughout the country have been making investments through loans with interest rates ranging from 10 to 15 percent per annum.
On Sunday, after hearing the requests of the Microfinance Association of Nepal (MFAN), Minister Sharma expressed his belief that the living conditions of the poor will not improve unless the MFIs that have access to rural areas lower their loan interest rates, as demanded by the MFAN. Minister Sharma stated that he was prepared to accept government support in order to bring down the interest rates set by the microfinance institutions (MFIs), and he urged the representatives of the MFIs to develop a plan for achieving this goal.
However, the delegation from the Microfinance Association of Nigeria (MFAN) stated that it would not be able to cut the interest rate of microfinance unless the interest rate of commercial banks was also reduced, as microfinances operate by taking loans from commercial banks.
They informed Finance Minister Sharma that the microfinance institutions (MFIs) have been giving loans at interest rates that are only two percent higher than those paid by commercial banks. They have called for the establishment of microfinance funds in the sectors of infrastructure, energy, and agriculture by the federal government. They have urged that the government develop a new strategy in this area, claiming that the Microfinance Policy, 2008, is unable to handle the current situation on the ground.
Members’ lives and livelihoods should be insured, according to demands submitted by a delegation led by the association’s chairman Jagat Bahadur Pokhrel. The fund should be established as provided in the National Microfinance Policy 2008, institutional tax on microfinance should be halved, interest on group members’ income should not be taxed, and the fund’s assets should be protected.