There has been a sharp surge in financial fraud cases linked to microfinance institutions (MFIs), with government authorities recording 456 new cases in just the past 10 days.
According to records from the Credit Information Bureau of Nepal (CIBN), the number of individuals and organizations blacklisted for microfinance-related offenses reached 14,751 as of Tuesday—up from 14,295 in mid-November. CIBN has been maintaining a separate record of microfinance-related blacklisting for the past three years.
Many entrepreneurs continue to struggle to repay bank loans amid the ongoing economic slowdown. Rising cases of cheque bounce have become common, further aggravated by the impacts of the Gen Z movement and recent violence.
MFIs have frequently been criticized for charging excessive fees to borrowers. Responding to increasing complaints, the Nepal Rastra Bank (NRB) has begun inspections into the operations and fee structures of MFIs.
Under NRB regulations, MFIs are allowed to charge a maximum of 1.5 percent of the issued loan amount per year as service charges. However, several MFIs have been found violating these guidelines by collecting service charges up to four times a year.
According to an MFI official, loan defaults in microfinance institutions have increased significantly, especially after the rise of the Gen Z movement.
Meanwhile, CIBN added 14,315 individuals and organizations to its blacklist for financial offenses during the first four months of the current fiscal year. Of them, 4,588 individuals and organizations were blacklisted for cheque bounce-related offenses, CIBN spokesperson Bijay Kunwar said.
So far, CIBN has recorded a total of 196,932 individuals and organizations in its blacklist. Speaking at a program two weeks ago, NRB Governor Maha Prasad Adhikari Poudel described the growing number of blacklisting cases as “unusual.”
Poudel noted that the criminalization of cheque bounce cases has contributed to the rising number of blacklisted individuals. He also expressed concern over loan loss provisioning rules, which he said have pressured banks to blacklist borrowers amid increasing cases of loan non-payment.
