Microfinance has a lot of contribution, let’s not just protest, we should solve it through the dialogue-Chairman Yadav

Kathmandu : Lastly, the movement against microfinance has been intense. Recently, the microfinance institutions that are giving loans without collateral to the village’s poor peoples. but, the villagers has been doing street protest against meter interest that the microfinance.

The movement against microfinance, which has been making a big contribution to raise the standard of living of the common people, has killed employees and managers. Even the government bodies are silent due to the loan waiver movement going on in the market. There has been a contraction in the profits of microfinance institutions. On the other hand, bad loans are also continuously increasing. It is very challenging for companies to collect loans and interest. Due to the lack of investment environment, borrowers are unable to repay their loans. The economy is not in a state of economic recession and debt burdens beyond its capacity to repay the debt. The negative movement towards microfinance has created confusion among the customers that the loans taken will be waived off.

Is it now a situation of microfinance crisis? What is the latest state of microfinance? Based on this, the correspondent for BeemaPost.com, Deepak Bista, had a conversation with Ram Bahadur Yadav, Chairman of Microfinance Bankers Association and Chief Executive Officer (CEO) of National Microfinance.  Yadav replied that Anarchic elements have dominated the movement against microfinance. This movement has progressed based on personal interests. Let’s discuss the problems we face from time to time with microfinance clients. Many things have been improved. There is a situation where the National Bank has said that they will extend the time to give loans.

It is clear that the chaotic activity that is still going on in this movement is selfish. In addition to personal interest, political interest is also connected to the movement. This movement is more in terms of getting financial benefits. This movement is not a real movement but is trying to turn it into politics.

What is the problem with the customers who have problems? The central bank has been saying from time to time, has there been a problem?

File a complaint. We ourselves have been saying that if there is a problem with the customers, we should solve the problem through discussion. Microfinance, which has played a major role in improving the living standards of poor people, is only being talked about negatively. The contribution is also big. The problem can be solved through negotiation. Come to the discussion. We provide options. Here the situation is that the customers come to the brand. However, a comment has been made that the person who took the loan went to protest.

The real victims do not say that the loan should be waived, but they are complaining that they adopted a chaotic style when they went to ask for the loan.

 Microfinance understands the real victim’s problem. Failure to repay the loan now means economic recession and debt burden exceeding capacity. If you are unable to pay your loan due to recession and debt burden, we have invited you to contact us. We are ready to solve the problem by giving more time to such victims or giving them loans to start new businesses. If there is a burden when taking a loan from 2/3 companies, we are also ready to arrange payment in installments. In this way, the burden of installments is reduced.

However, there is no situation in which microfinance can do anything for those who say that, I will not give money under any circumstances, and my debt should be waived. There is no alternative to debt clearance.

Microfinance is looking for the real victims. If the actual victim does not have food at home and the economic situation is poor, we have not said anything about giving money. We do what we can to fulfill the basic needs of families including children. Get in touch with us, microfinance is yours. Now it is not necessary to pay money immediately. If there is a difficult situation, let’s discuss and find a solution. This preparation is more than microfinance can do.

Is the demand of the microfinance victims who are spending the night on the streets without even having a single meal in the morning and evening not justified?

 The demand of the microfinance victims committee is chaotic. The illegal campaign committee is carrying out chaotic activities. Is there a possibility of loan waiver? If loans are waived in this country, what will be the effect on the banking sector? What is its effect on credit discipline? What effect does it have on a person’s mind? This demand is a demand that cannot be fulfilled.

It is not possible to abolish microfinance institutions. What is the alternative to microfinance?

So many microfinance institutions have disbursed 4 trillion 32 billion rupees to 60 million rural households without collateral. Money is given on the basis of trust, on the basis of honesty, on the basis of purpose without collateral, this is not possible. The abolition of the organization is a very chaotic demand. Another demand is to give the price according to the work, which is not related to microfinance. The need to build socialism is also something far beyond microfinance. Because of this, looking at the demands of the Struggling Committee, one wonders what kind of movement it is. There is now a movement of microfinance victims on a journey without purpose. Such demands cannot be resolved. If it is a real problem, the basis of the solution can be given.

 If you look at the profits of microfinance, they have shrunk a lot. Is it due to bad credit or is there another reason?

 The main reason for the decline in the profitability of microfinance is the increase in bad loans. Another thing is the ‘cap’ imposed by the National Bank on dividends. The ‘cap’ has played a major role in the decline in profits.

 Even the system of the National Bank to increase the interest on savings has led to a situation in which microfinance has collapsed. 50% of the 7.5% interest on the loan should be given to savings. It has also affected microfinance. The main reason for the decline in profits is loan waivers and chaotic activities on the streets. Microfinance has never charged more than 15 percent interest. We are working in the circle of regulatory bodies. Some people are acting for their personal interests by confusing the customers with the market manipulation.

There is a commentary that the problem of cooperatives and microfinance is the same, but how can it be broken?

This is something that is not understood. Cooperatives and microfinance are as different as heaven and earth. The problem of cooperatives is that the board has eaten money. This is the embezzlement of the customer’s money. The problem of microfinance is that the problem given to the client is non-payment. Cooperatives and Microfinance are just a work of consolidation. Cooperatives make loan investments based on savings.

However, there is no savings in microfinance. Microfinance starts with loans, not savings. Customers of cooperatives can be rich or poor. However, the customers of microfinance are the poor, which is working to provide loan without mortgage.

Microfinance provides loans based on trust and honesty. Now, what steps can the regulator take to become a solution point?

The recent chaotic activities on the streets should be stopped immediately. The government needs a big role in this. It is the responsibility of the government to provide peace and security. The banking sector is sensitive.

The government should think about what will happen to the country’s economy if the banking sector deteriorates. The main responsibility lies with the government. However, when the anti-microfinance movement came to the streets, the role of the government was weak. The government has now become a silent spectator. According to which there should be a role to stop chaotic activities. But, government has failed. The central bank should make policy arrangements time-sensitive.

A policy system should be brought in looking at all areas. What the National Bank should do immediately is to remove the 15 percent cap. Due to this cap, microfinance is not viable. The National Bank should also pay attention to concessional loans. 50 percent of the total loan has gone to agriculture. Concessional loans will be available to A, B, and C, but microfinance will not. This means that the poor do not get concessions and only the rich get concessions. If such subsidized loans are introduced in microfinance, farmers will get this facility.

It is necessary to distribute allowances and pensions at the local level through microfinance rather than commercial banks. Microfinance has reach to the village. We can go door to door and give money.