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Supreme Court orders to stop anarchy in microfinance sector 

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लगानी न्यूज

. KATHMANDU: The Supreme Court (SC) has issued an order to discourage the anarchic activities seen in the microfinance sector and the campaign of defaulting on loans. A division bench of Justices Hari Prasad Phuyal and Bal Krishna Dhakal issued a directive to the government to actively control the activities against microfinance.

The Supreme Court has issued a mandamus order in the name of the government to pay attention to the security of microfinance institutions, take action against groups obstructing loan recovery and not to register institutions with illegal intentions.TAG_OPEN_div_16 In addition, it clarifies that it is the legal and moral obligation of the borrower to repay the installment, and the misconception that the loan will be forgiven is illegal.

The verdict defines the activities being carried out in the name of the ‘Struggle Committee Against Microfinance’ — such as refusing to pay the debtors, attacking the employees, locking the office and obstructing the auction process — as serious criminal acts.

The Supreme Court has directed the Ministry of Home Affairs, Nepal Police and Nepal Rastra Bank to play an active role to stop such activities.TAG_OPEN_div_12 It also called for providing security to those who want to repay loans, preventing illegal assemblies and agitations, and investigating and prosecuting those involved in spreading misinformation in an organized manner.

Drawing attention to the internal weaknesses of the microfinance institutions, the court said that excessive profit-oriented tendencies, multi-banking problems and weak regulation have added to the problem.TAG_OPEN_div_10 For this, the NRB has been suggested to tighten effective monitoring and regulation.

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