Kathmandu. Finance Minister Janardan Sharma has urged the microfinance institutions to reduce the existing interest rates on loans. Microfinance institutions have been investing in loans at 10 to 15 percent interest rate. Understanding the demand of the Micro Finance Association of Nepal, Minister Sharma was of the view that the living standards of the poor people would not change unless the microfinance institutions with access to villages reduced interest rates.

The delegation said that it would not be possible to reduce the interest rate of microfinance unless the interest rate is reduced as microfinance is operated by taking loans from commercial banks. The state has demanded the setting up of microfinance funds in the areas of infrastructure, energy and agriculture. Stating that the microfinance policy of 2064 BS cannot address the current problem, they have demanded the government to formulate a new policy in this regard.

In the demand submitted by the delegation led by the chairman of the association Jagat Bahadur Pokhrel, the fund should be established as provided in the National Microfinance Policy 2064, the institutional tax on microfinance should be reduced by half, interest income of group members should not be taxed and life and livelihood of the members should be insured. And demands that insurance companies provide reinsurance services.

There are 70 microfinance institutions in all the districts. Of these, 48 are at the national level and 22 at the local level. The total investment in microfinance institutions is Rs. 39.92 billion. With a deposit capital of over Rs 130.42 billion, microfinance institutions have invested Rs 365 billion in loans. 83.4 percent of it has been invested without collateral. 97.8 percent of microfinance borrowers are women.