Nepal Rastra Bank has instructed microfinance institutions to determine loan interest rates using a benchmark rate starting from Sawan 1, 2082. These institutions can add a premium of up to 3 percent to their benchmark rate but must keep rates within regulatory limits compared to commercial banks.
Nepal Rastra Bank has directed microfinance financial institutions to set their loan interest rates based on a benchmark rate effective from Sawan 1, 2082.
According to the new regulation, microfinance institutions may add a maximum premium of 3 percent to their benchmark rate when determining loan interest rates.
As per a circular issued by the central bank on Thursday, microfinance institutions must calculate the average benchmark rate over the past three months and add the premium to set the interest rate. Additionally, these institutions are not permitted to set interest rates higher than the rate obtained by adding 9 percentage points to the monthly average benchmark rate of commercial banks.
The circular states, “Microfinance institutions can set loan interest rates within the limit of either the benchmark rate plus up to 3 percent premium or the commercial banks’ monthly average benchmark rate plus 9 percent, whichever is lower.”
Microfinance institutions are required to set their benchmark rates monthly and submit the rates to Nepal Rastra Bank within 15 days after the month ends. These rates must also be published on their websites.
Furthermore, loan agreements must clearly state that the annual penalty (fine) interest rate will not exceed 2 percent.
This article was originally published on https://bajarkochirfar.com Translated with the help of AI and reviewed by our editorial team.
