Finance companies propose Microfinance Development Bank

Nepal Finance Companies Association (NFCA) has proposed a Rs 200 million to Rs 250 million worth Microfinance Development Bank (MFDB) that will not only help deprived borrowers get access to finance, but which will also provide technical consultation and orientation programmes, coupled with project financing for returnee migrants.

"The central bank is positive about the proposal," said the association's president Rajendra Shakya, after discussions with the central bank today.

However, Nepal Finance Companies Association is only a facilitator, he said, adding that the association has proposed a 60 per cent equity participant from commercial banks, development banks and finance companies. "Experts and technicians can also have a 10 per cent equity partnership in the proposed Microfinance Development Bank that will provide both wholesale and retail lending," added Shakya.

"The concentration of the proposed institution will be on livestock, animal husbandry and dairy, as the demand for farm, livestock and dairy products has been rising lately but the country has to import most of the products."

Central bank governor Dr Yubaraj Khatiwada is also enthusiastic on the proposed institution as the central bank has been encouraging banks and finance companies to go to rural areas to help in agriculture and livestock, he said, adding that the central bank has to, however, bring in project finance, as it currently has no such provision.