Kathmandu. The provision relating to liquid assets of microfinance institutions has been amended.
KATHMANDU: Nepal Rastra Bank (NRB), the central bank of Nepal, has revised the liquidity provisions by amending the integrated directive issued in the name of microfinance institutions. Institutions that do not mobilize deposits from the general public are required to manage liquid assets of 2.5 percent of the total savings liabilities of the previous month.
As per the new directive, the deposits held in class A, B and C licensed institutions (except problematic ones) will be considered as liquid assets of microfinance. Previously, only deposits in ‘A’ class banks were considered liquid assets of microfinance.
Similarly, in the case of fixed deposits of class A, B and C banks and financial institutions (except problematic ones), only up to 90 percent should be counted as liquid assets. Earlier, this calculation was applicable only in the case of fixed deposits in ‘A’ class banks.
Amending the Consolidated Directive, the central bank has removed the provision of publishing the balance sheet, profit and loss accounts and cash flow details as per Directive No. 4.1 of the Microfinance Institutions (NFRSS) which are not in compliance with the NFRSS and the requirement of updating all schedules and statements related to these financial statements in the Annual Report Book and also on their websites.
The amendment has also removed the provision of compulsorily publishing the details of balance sheet, profit and loss account, cash flow details as per the capital fund table (Schedule No. 4.24÷4.24 (a) and major indices (Schedule No. 4.25) for public information within nine months of the end of the fiscal year.
According to the revised directive, microfinance institutions will now have to report any income and expenditure on an accurative basis. In this way, the microfinance institution should clearly disclose the policy regarding income and expenditure in its accounting policy.
Likewise, through the amended directive, microfinance institutions will now be able to provide assistance to the families of customers who are affected by natural disasters or accidents from the Customer Protection Fund. Earlier, this system was in place.
Meanwhile, the central bank has published a unified directive on the names of A, B and C, infrastructure banks and D class banks and financial institutions as amended till January 15.
