As per the non-field based supervision data published by Nepal Rastra Bank, the microfinance companies invested Rs 9.91 billion including government bonds, shares and debentures by the six months of the current FY.
The companies had invested Rs 147 billion in the end of the last FY. The investment increased by 32.61 percent during the period. The investment increased by 70.40 percent compared to the previous FY.
The central bank said that the companies diverted the amount deposit in fixed deposit to loan extension which has shrunk their overall investment. The companies are investing in loan extension by withdrawing fixed deposits as the interest rate has risen significantly in recent days.
Right now, the microfinance companies are not getting borrowing at 13 percent interest rate. Given that NRB has capped the interest rate at 15 percent, they cannot charge above the rate. Moreover, they will have to incur huge cost of fund if they invest by borrowing funds from banks. Therefore, they are withdrawing their own deposits and investing the fund.
The microfinance companies have Rs 8.27 billion in fixed deposits in the six months period of the current FY which is 38.01 percent less than the last FY.
