Microfinance Companies told to Prepare Financial Statements in line with NFRS

August 26: Nepal Rastra Bank (NRB) has amended the Unified Directive making it mandatory for microfinance companies to prepare their financial statements according to Nepal Financial Reporting Standards (NFRS).

Earlier, microfinance companies used to prepare financial statements according to Nepal Accounting Standards (NAS). From now on, NRB has directed them to prepare the financial statements as per NFRS. The central bank has said the financial statements of 2020/21 should also be prepared according to the NFRS system.

NRB has implemented some of the provisions announced in the monetary policy regarding microfinance companies by amending the Unified Directive. Dev Kumar Dhakal, spokesperson of the central bank, informed that provisions introduced for microfinance companies in the monetary policy have been implemented by making some new arrangements.

According to the central bank, microfinance companies opting for merger will be allowed to set up corporate and branch offices in Kathmandu Valley.

Corporate and branch offices will be allowed to be established only in Kathmandu Metropolitan City and Lalitpur Metropolitan City

The central bank has also amended the provision of service charge applied while providing loan services. Microfinance companies were allowed to charge 1.50 percent service charge while approving loan. With the new provision, such companies will be charging service fees annually at the same  proportion.

In case of loans of less than one year period, the NRB has directed microfinance companies to charge service fees proportionally at the rate of 1.50 percent on the basis of loan period.