The central bank's Bank and Financial Institutions Regulation Department issued a circular restructuring how wholesale and retail microfinance institutions integrate.
Exercising the authority granted under Section 79 of the Nepal Rastra Bank Act, 2058, the central bank has laid down the following key changes:
- Mandatory Retail Operations: Moving forward, if a wholesale lending microfinance institution merges with or is acquired by a retail microfinance institution, the resulting integrated entity is strictly barred from wholesale operations. It must function exclusively as a retail-focused microfinance institution.
- Five-Year Wholesale Loan Window: To facilitate a smooth structural transition, any wholesale loans disbursed by the original wholesale provider prior to the merger must be fully settled or cleared within five years from the official commencement date of the integrated operations.
The directive, signed by NRB Executive Director Ramu Poudel, has been formally dispatched to the Ministry of Finance, the Office of the Governor, the Nepal Microfinance Bankers' Association, and other relevant government stakeholders for immediate implementation.
