Microfinance In NEPSE

Micro-finance is a financial institution, which provides the microloan to the low individuals or group to generate the basic income source. Furthermore, this type of financial institution is popular in developing countries such as Bangladesh, Uganda, Nepal, and Serbia.

Although microfinance has a long history, it became popular in 1970. Muhammad Yunus started the modern microfinance concept from Grameen Bank in 1976. Muhammad Yunus and Grameen Bank were awarded by Nobel prize in 2006 for their contribution in develop the microfinance sector. Micro-finance is popular in India as well. It is serving many poor clients in different states.

As per the report of the world bank, more than 500 million people are benefited from Microfinance all over the world. Microfinance contributed a lot to the Nepalese economy and there are more than forty listed Microfinance in NEPSE.

Microfinance in Nepal

Firstly, Microfinances started formally in 2036 BS in Nepal. Agriculture Development Bank Limited  (ADBL) played a significant role to introduce Microfinance in Nepal. Rastriya Banjiya Bank started the microcredit to women of rural area in 2038 BS.

In Nepal, Dr. Harihardev Pant started the microfinance concept. Secondly, Nepal Rastra Bank (NRB) started a microcredit program but later it changed into Microfinance. Microfinance used to operate under the development bank act but now it is operating under the banking and financial institution act. Microfinance is denoted under the ‘D’ category of financial institutions.

There was a couple of rural bank in the Western and Eastern part of Nepal in 2050. These banks used to supply microcredit in a rural area but it was not affected as it supposed to be. Finally, in 2050 BS much non-governmental microfinance like Nirdhan, Chhimek started to operate as microfinance.

Initially, Nepal Government announced many poverty-related loans such as small sector loans, priority sector loans, productive loan programs for rural women through financial institutions in 2050. Because of fewer branches of a financial institution in rural areas government failed to achieve the intended objective. So, the concept of Microfinance in Nepal emerged.

Listed Microfinances in NEPSE

S.N.Symbol          Name
1CBBLChhimek Laghubitta Bittiya Sanstha Limited
2DDBLDeprosc Laghubitta Bittiya Sanstha Limited
3FMDBLFirst Microfinance Laghubitta Bittiya Sanstha Limited
4KMCDBKalika Laghubitta Bittiya Sanstha Limited
5NLBBLNerude Laghubitta Bittiya Sanstha Limited
6NUBLNirdhan Uthan Laghubitta Bittiya Sanstha Limited
7RMDCRMDC Laghubitta Bittiya Sanstha Limited
8SKBBLSana Kisan Bikas Laghubitta Bittiya Sanstha Limited
9SLBBLSwarojgar Laghubitta Bittiya Sanstha Limited
10SMFDBSummit Laghubitta Bittiya Sanstha Limited
11SWBBLSwabalamban Laghubitta Bittiya Sanstha Limited
12MLBBLMithila Laghubitta Bittiya Sanstha Limited
13LLBSLaxmi Laghubitta Bittiya Sanstha Limited
14MMFDBMirire Laghubitta Bittiya Sanstha Limited
15JSLBBJanautthan Samudayic Laghubitta Bikas Bank Limited
16WOMIWomi Microfinance Bittiya Sanstha Limited
17VLBSVijaya Laghubitta Bittiya Sanstha Limited
18RSDCRSDC Laghubitta Bittiya Sanstha Limited
19NMBMFNMB Laghubitta Bittiya Sanstha Limited
20MEROMeromicrofinance Laghubitta Bittiya Sanstha Limited
21ALBSLAsha Laghubitta Bittiya Sanstha Limited
22NMFBSNational Microfinance Laghubitta Bittiya Sanstha Limited
23SLBSSuryodaya Laghubitta Bittiya Sanstha Limited
24GMFBSGanapati Microfinance Bittiya Sanstha Limited
25CLBSLCivil Laghubitta Bittiya Sanstha Limited
26ILBSInfinity Laghubitta Bittiya Sanstha Limited
27FOWADForward Microfinace Laghubitta Bittiya Sanstha Limited
28SMATASamata Gharelu Laghubitta Bittiya Sanstha Limited
29MSLBMahuli Laghubitta Bittiya Sanstha Limited
30GILBGlobal IME Laghubitta Bittiya Sanstha Limited
31SMBSupport Microfinance Bittiya Sanstha Limited
32GBLBSGrameen Bikas Laghubitta Bittiya Sanstha Limited
33MLBSLMahila Laghubitta Bittiya Sanstha Limited
34GLBSLGurans Laghubitta Bittiya Sanstha Limited
35NICLBSLNIC Asia Laghubitta Bittiya Sanstha Limited
36SLBSLSamudayik Laghubitta Bittiya Sanstha Limited
37SDLBSLSadhana Laghubitta Bittiya Sanstha Limited
38SMFBSSwabhimaan Laghubitta Bittiya Sanstha Limited
39SABSLSabaiko Laghubitta Bittiya Sanstha Limited
40ACLBSLAarambha Chautari Laghubitta Bittiya Sanstha Limited
41USLBUnnati Nepal Laghubitta Bittiya Sanstha Limited
42SNLBSarathi Nepal Laghubitta Bittiya Sanstha Limited
43KLBSLKisan Laghubitta Bittiya Sanstha Limited

Top 5 Microfinance Listed in NEPSE

Currently, the market price of Microfinance is relatively high as compared to other financial institutions. Limited outstanding shares, good dividend and bonus capacity, high demand and low supply of share is the major reason of stock’s high price.

And, after a comparison of paid-up-capital, dividend distribution, Reserve and Surplus, Deposit and borrowing, Loan and Advance, Net Interest Income, and operating profit we listed the top five microfinance for investors.

  • CBBL (Chhimek Laghubitta Bittiya Sanstha Limited)
  • DDBL (Deprosc Laghubitta Bittiya Sanstha Limited)
  • NUBL (Nirdhan Uthan Laghubitta Bittiya Sanstha Limited)
  • SWBBL (Swabalamban Laghubitta Bittiya Sanstha Limited)
  • FOWAD (Forward Microfinace Laghubitta Bittiya Sanstha Limited)

As compared to others, FOWAD microfinance’s stock market price is high. Recently, many microfinance is overpriced but these five companies are still good to buy.

HeadingCBBLDDBLNUBLSWBBLFOWAD
Paid Up Capital ‘Crores’18311516994.3062.5
Earning Per Share (EPS)69.6559.7556.2320.2177.07
Price/Earning Ratio25.6428.9030.5085.1136.20
Market price Per Share17861727171517202790
Networth Per share258.52198.21254.78237.13268.45
Listed Shares18,300,30011,562,48616,950,0009,430,0006,255,190
Operating Profit (in Rs  Crore)87.07-72.1444.7156.5439.45
Deposits ‘Rs Arba’18.674.9413.349.295.61
Borrowing ‘Rs Arba’4.076.516.954.765.95

Here operating profit, Deposits, and borrowing are presented on the basis of the fourth-quarter report of 3076/77. So, the above five companies are good for long-term investors.

Future of Microfinance’s in Nepal

The policy about the financial liberalization, the support from other financial institutions to microfinance, different regulation of Nepal Rastra Bank will impact the growth of the microfinance sector in Nepal. Likewise, there are many rural areas where any financial institution is not reached yet. So, for overall financial development and to increase financial literacy across Nepal the growth of microfinance is necessary.

Many investors are investing their amount in the Microfinance sector. There is high competition between different microfinance companies. All microfinance stock’s prices are high. Also, Microfinance in Nepal are transparent in their financial and social activities and they are regulated by NRB under different Act so, this sector is safer for investment.

All microfinance have positive financial status and they are spreading their branches in different locations. Empowering women and support for small and medium enterprises are the major purpose of Microfinance in Nepal.

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