All financial intermediary non-governmental organizations (FINGO) will be upgraded to microfinance institutions within 13 months, Nepal Rastra Bank (NRB) Governor Chiranjibi Nepal said while addressing the inaugural session of the Fourth Microfinance Summit on Wednesday.    

This means the 25 FINGOs currently operating in Nepal will be converted into microfinance institutions by mid-April 2017 and will be regulated by the central bank.

According to Governor Nepal, the FINGOs-turned-microfinance institutions will have to register with the Company Registrar Office (CRO) and issue shares to the general public.

“They must complete their initial public offerings by mid-December 2018,” said Nepal. “This will increase the number of microfinance institutions, ultimately boosting investment in and access to the sector.”

Governor Nepal warned microfinance institutions to carry out self-regulation or face stringent action from the central bank. He also urged them to eliminate anomalies like high interest rates on loans. “If shareholders in microfinance institutions aspire to earn millions, they should know that they are in the wrong business,” said Nepal, “Probably, you should consider doing some other business.”

The objective of microfinance institutions should be to serve the poor by providing them credit to run their enterprises, he added.

Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara urged microfinance institutions to extend their services to the doorsteps of the people. “In order to balance financial, social and human values which is the theme of this summit, you much go to the door of the poor,” Mahara said. Ram Chandra Joshi, president of the Nepal Microfinance Bankers’ Association, said that lack of funds was one of the major problems faced by microfinance institutions in the country. “If this situation continues, the good work that has been done till date will go to waste,” said Joshi.  

The two-day event organized by the Centre for Microfinance is being attended by 800 professionals engaged in the field of microfinance in the country. The participants will discuss various topics and problems being faced by microfinance institutions with the aim of recommending viable solutions to the central bank and the government.