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Micro Finance

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Member
Registered: Oct 2013
Posts: 7382
----- I believe NRB, the committee was forced to decrease/fix spread rate of micro cause of media, jealous investor and price of the micro finance in NEPSE.

We all know, evil spirit tried to decrease price of all companies and including micro, when they could not, they used media to spread non sense like - garib lai dena loan kina mahango).

Before, micro finance are introduced, people in village had to pay 100% interest or more. I read in a paper, a few days ago, in a village in terai, people are paying 4 times interest.

Interest of micro is high cause of risk, cost. Would the evil spirit proved loan to any one with out collateral at 50% interest. If not shot #@$! #$ $$.

When NRB makes decision, they should make decision based on facts, not some noise spread by evil spirit.
Member
Registered: Oct 2013
Posts: 7382
Now the real deal abut micro (I have 2/3 most important and one of them is very important (idiot big mouth- media/ jealous investors) should focus)-

---- Banks charge 1/2% service charge while micro finance too charge 1/2 % service charge (in most case).

Is not it amazing, all banks does is paper work, and one field visit and they need 1% service charge.

While, micro finance has to approach customers, teach them how to make money out of money, train them, motivate them, many other services , all those staff and still they charge just 1%,
may be they put real cost in the interest they charge. It could be possible that their real cost is 5-10%.

I think, they should include their cost of operation into service charge and take 7% + interest and add insurance cost.
Member
Registered: Oct 2013
Posts: 7382
- Since, we all know, the volume of loan, micro provides are small in quantity, which makes their business expensive.

-Risky business, since their is no collateral for a lot of lending by micro, makes them very very risky. Today, they are insured up to 70%, but still there is 30% risk and the real return could be just a few percentage which makes 30% very risky.
And if there is huge default, even insurance company may go bankrupt.

-They have to perform all kind of services, which makes their work really hard.

-Cause of small volume, small number of customer scattered in vast ares, a lot of services to be provided make their work very hard.

(By the way, was default loan of 5 grameen banks loan insured or not, if yes, when can we expect insurer to pay it)
Member
Registered: Oct 2013
Posts: 7382
I am no expert in micro finance, but, since I am an investor and I have good investment in Micro Finance too (I diversify my investment), I have to look for as much information as possible regarding MICRO FINANCE. (There are a lot of thing I dont know about micro finance, but still I now believe I know more about micro finance than NRB, the committee, media, leg puller investors, ).

When I guesses Spread rate 12% (min) based on following characteristics of Micro Finance:
- Small Volume of loan,
-Risky business,
-Hard Word
-High cost of operation
Member
Registered: Oct 2013
Posts: 7382
When I guesses Spread rate 12% (min) based on following characteristics of Micro Finance:
- Small Volume of loan,
-Risky business,
-Hard Word
-High cost of operation

The committee, I think, fixed 7% spread rate based on only one character- small volume of loan.

I thing, the committee member are bhat mara, who has limited idea of banking sector and worst of all no idea about micro finance. They made decision without leaving their chair.

(I suggest all organization- Sebon, Nepase, NRB etc to make decision only after talking to concerned individuals, organizations)

I guess, then they fixed 7, they may thought of themselves as generous, intellectual- ---------------------- since, banks get 5, and micro finance lend small amount so lets give them 7.

Today, the decision of those incompetent idiots have back fired.
Member
Registered: Oct 2013
Posts: 7382
We had been hearing about NRB forming committee to fix spread rate for Micro finance.

Some (those jealous type, who wanted to bring down the price) thought, it would decrease the rate by a lot, It used to be around 14.

My guess was 12%, but the committee fixed 7 %. I was socked.
Member
Registered: Feb 2016
Posts: 60
I heard the same as well. I believe MFs are lobbying for adding their operational costs.

Please do share your views when you get time.
Member
Registered: Oct 2013
Posts: 7382
SWBBL is one of the best and increased profit by a lot, almost 100EPS.

But due to stupid NRB, there is dark cloud over Micro.

A couple of week ago, i read in other forum about NRB letting Micros include their cost in spread rate, was that just a rumor or truth?

I opened this topic to right about micro, but due to bearish NEPSE, i dont have mood.

may be today or tomorrow, i would disclose my view.
Member
Registered: Feb 2016
Posts: 60
SWBBL seems to me to be one of the most undervalued shares out there at the moment with people not buying due to psychological fear. I'm pretty certain that MFs will find a loophole from the new law about the spread rate so that they can add their operational costs. Thoughts?
Member
Registered: Oct 2013
Posts: 7382
Micro Finance and its latest controversy.

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