Nepal Rastra Bank (NRB) has started taking action against those banks and financial institutions, including the microfinance institutions (MFIs), which were found collecting hefty amounts in premiums and service charges from their clients.
Dev Kumar Dhakal, executive director of NRB, said the central bank has recently written to the microfinance institutions to send details of the service charges the borrowers are being charged.
According to NRB rules, the MFIs can charge a maximum of 1.5 percent of the issued loans per year from the service seekers. Breaching the regulator’s guideline, a number of MFIs have been found taking service charges up to four times a year.
As of now, the MFIs are estimated to have collected Rs 800-900 million just from charging excessive amounts under the heading. Similarly, the MFIs have also been suspected of capitalizing on the interest earnings of their depositors – the institutional depositors in particular – in a shorter time period in order to provide an excessive interest amount to these favored depositors.
Last week, the NRB grilled 11 commercial banks that have imposed excessive premium rates on the borrowers. After finding these banks guilty, the NRB even made them return the excessive premium amounts back to the borrowers concerned.
