Tuesday, October 2, 2018

MFIs to get licence of digital payment service provider

The central bank has allowed microfinance institutions (MFIs) to provide payment service through electronic means, payment cards and mobile wallet digital payment service, if they have atlest 20 branches, and safe system. With the new circular, all class – from ‘A’, ‘B’, ‘C’ to ‘D’ – financial institutions can work as payment service provider.
According to a circular issued today by Nepal Rastra Bank (NRB), the paid-up capital of class ‘D’ financial institutions must be Rs 100 million, must have worked with no less than 20,000 borrowers and depositors through at least 20 branches to be eligible for the licence.
However, the information technology used by them must be reliable and should have been using online system to submit required data to the central bank, the circular reads, adding that the MFIs must submit the minutes of the decision of its board of directors along with IT policy. "MFIs must also submit product manual and user manual with applications to obtain the licence of payment service provider."
The MFIs wishing to work as digital payment service provider should have identified risks like market and system risks, the central bank adds. "It also should have an agreement with a telecommunication service provider for the digital payment."
The circular also reads that they can get the license for becoming payment service providers (PSP), if they have online network connectivity between head office and the branches, which is a must. The MFIs must have short message system (SMS) facility for clients, for which they have to get approval from the central bank.
The payment service providers are those institutions that carry out domestic money transfer business or pay bills of both goods and services or provide payment related services or provide payment activities through electronic means.
Of the total 65 microfinance development banks in the country, only Nirdhan Utthan Laghubitta Bittiya Sanstha and Chhimek Laghubitta Bittiya Sanstha meet the paid-up capital requirements to get the PSP license as of the end of last fiscal year.

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