Urge to reduce interest rates

Constituent Assembly (CA) members have requested the government to differentiate between large banks and non-profit micro finance companies regarding tax rates. The government has lumped both types of institutions in the same category for taxation purposes.

The CA members also focused on decreasing the interest rates for these micro finance companies which aim to help the rural public outside the Kathmandu Valley. There are many micro finance companies and cooperatives in the eastern region of the country.

A team of 20 CA members visited the east to do a survey of these micro finance companies and found that the government had kept them under the same tax policy as the larger banks in the country. They were there to study the effects of the micro finance programmes on the lives of the people.

They have also said that the government should motivate the micro finance sector besides promoting it. The government should allow these banks to provide loans to the rural public without collateral, they said.

CA member Shanti Adhikari said that the government should free these micro finance companies from the tax rates. She added that the government should make efforts to manage the micro finance sector and form a finance commission to provide easy accessibility to the rural people.

Similarly, another CA member Bishnu Bik said that people in the past used to put up their lands and houses as collateral and take loans at an interest rate of about 60 percent. "But micro finance companies today should provide loans at 20 percent interest and without collateral which will increase the living standards of the locals in the respective areas," Bik added.

Source: eKantipur