Dividend Capacity of Microfinance Companies in Nepal

Dividend Capacity of Microfinance Companies in Nepal for 2081.

Microfinance is the "D" class of banks and financial institutions in Nepal. There are more than 50 microfinance companies in Nepal that are listed in NEPSE. Not all microfinance companies are eligible to distribute dividends to their shareholders.

As per the dividend capacity, Chhimek Laghubitta, Jeevan Bikas Laghubitta, and Sanakishan Laghubitta are in first, second, and third position with 64.84%, 62.40% and 42.67% respectively. However, their dividend capacity as per the new circular of Nepal Rastra Bank is 25%.

As per the New Circular of Nepal Rastra Bank, Microfinance finance companies can distribute up to 25% dividend to their shareholders. However, the companies must meet certain conditions to distribute the dividend to their shareholders.

Companies must maintain the Non-performing Loans(NPL) and Capital Adequacy Ratio (CAR). If any company wants to distribute 25% dividend to their shareholders than it must have NPL less than 5% and more than 12% CAR. So, there are only three companies that are eligible to distribute 25% dividend. They are CBBL, SKBBL, and JBLB.

New Rules of Dividend of Microfinance as per the Nepal Rastra Bank (NRB)