Microfinance Development Centre in offing

The government is planning to set up Microfinance Development Centre.
"We are discussing modality of the Microfinance Development Centre that will provide wholesale lend to the microfinance institutions," said a central bank official.
"However, there is a confusion over possible duplication as the Rural Microfinance Development Centre (RMDC) is also providing the similar service," he said, adding that the central bank is holding massive discussions with the stakeholders to avoid the duplications.
There are around 93 microfinance institutions under the umbrella of RMDC that has supported and helped them grow.
According to the statistics, around 16,00,000 households are taking the advantage from the formal channels of microfinance institutions. However, in the recent years, the cut-throat competitionamong the microfinance institutions has led to overlapping and overindebtness, which could lead to an accident in the sector.
Excluding the overlapping, around 12,50,000 poor households are getting the benefit from the microfinance institutions. "It is almost half of the total target," the source said, adding that there are around 25,00,000 poor households that need the help of microfinance institutions.
The microfinance has been slowly deviating from its goal of serving pro-poor to non-poor and are profit-oriented due to greed, according to the source at the central bank.
They are quantity driven rather than quality driven and multi-servicing coupled with a high lending concentration in the Tarai and accessible hilly districts.
"To regulate and monitor the malpractise of these institutins, the central bank has brought the second tier institution that will supervise them,' the source said, adding that last week the cabinet has approved the Microfinance Authority.
The Microfinance Authority will supervise the 45 non-governmental organisations (NGOs) and 19 Microfinance Institutions (MFIs). "Of the total 45 NGOs, around 15 NGOs are inactive at present," according to the central bank source.
The country has a bitter experience of failure of Grammen Bank earlier that has made the central bank more serious over the Microfinance Development Centre's modality and functions that could help expand microfinance services to the remote hilly districts where there are not a single microfinance institutions.
"Most of the microfinance institutions have been overcrowding in the Tarai and accessible hilly districts instead of serving the remote hilly poor people," he added.