Do not harass borrowers while recovering loans, central bank instructs microfinance companies

KATHMANDU, JANUARY 8: The Nepal Rastra Bank has issued directives to microfinance institutions to ensure that borrowers are not subjected to harassment during loan recovery processes. These guidelines are part of the newly released operating instructions for microfinance institutions.

"The lenders should not make unnecessary phone calls to borrowers and to refrain from any actions that may disrespect the borrower’s family, friends, or colleagues. Additionally, microfinance staff can visit a borrower’s home only if the borrower has missed three group meetings or office appointments," states the central bank.  If a borrower is late on payments just once or is absent from meetings, staff are not permitted to conduct home visits for loan recovery.

Furthermore, the bank has explicitly prohibited microfinance employees from employing any harsh methods (like using disrespectful language) during loan recovery. They must not use threatening or disrespectful language towards borrowers.

The directives aim to promote fair treatment and respect for borrowers within the microfinance sector.

 

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