Kathmandu. Nepal Rastra Bank (NRB) has revised the dividend policy of microfinance. Nepal Rastra Bank (NRB) has banned microfinance companies with more than 15 per cent bad loans from distributing dividends.

Similarly, rastra bank has also made a provision that microfinance institutions can distribute dividend up to 25 percent on the basis of capital fund ratio and non-performing loan ratio. Nepal Rastra Bank (NRB) had imposed a 15 per cent cap on dividend distribution to microfinance institutions. The provision was amended through a circular on Sunday.

Similarly, microfinance institutions with non-performing loans of less than 5 percent and capital fund ratio of more than 12 percent will be able to distribute dividend up to 25 percent. Even if the capital fund is above 12 percent, if the non-performing loan is 5 to 10 percent, then 20 percent dividend will be given. Similarly, if the capital fund ratio is above 12 percent, then the dividend can be distributed up to 15 percent even if the non-performing loan is above 10 percent to 15 percent.

Microfinance companies with a capital fund ratio of 10 to 12 percent will be able to share 20 percent dividend if the non-performing loan is less than 5 percent. Those with 5 to 10 per cent non-performing loans will be able to share 15 per cent dividend and those above 10 to 15 per cent will be able to share 10 per cent dividend.

Microfinance companies with a capital fund ratio of 8 to 10 per cent will be able to distribute 5 to 15 per cent dividend depending on the non-performing loans, according to the NRB. According to the directive, 15 percent dividend can be distributed if the non-performing loan is less than 5 percent, 10 percent if it is 5 to 10 percent and 15 percent if it is 10 to 15 percent.

Microfinance companies will not be able to distribute dividends if their non-performing loans exceed 15 per cent. Similarly, cash dividend can be paid only with a minimum capital fund of 9 per cent. Currently, NIC Asia and Nesdo Samriddhi Microfinance have more than 15 per cent non-performing loans.

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