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Nepal Rastra Bank (NRB) has introduced significant regulatory updates for microfinance institutions (MFIs) with the release of a new circular targeting microfinance institutions, including money transfer services and payment providers.
Provisions set out in the new circular include compliance with the Nepal Financial Reporting Standards (NFRS) and the adoption of stricter risk management frameworks.
Larger institutions are now mandated to maintain a minimum capital adequacy ratio of 5 percent.
The directive also places an emphasis on digitalisation in digital payments, and requires institutions in scope to implement platforms for loan management and repayments.
Annual audits and compliance reports must be submitted to the NRB, with penalties or restrictions for non-compliance.
To support these changes, the NRB has said that it encourages partnerships with local technology firms to bolster their systems.
