Nepal Rastra Bank — the central regulatory and monetary authority — has allowed microfinance institutions (MFIs) to obtain the licence of digital payment service provider.
However, the central bank has put forth some conditions to allow MFIs to obtain the licence of payment service provider. As per a circular issued today, the paid-up capital of class ‘D’ financial institutions must be Rs 100 million and they must have worked with no less than 20,000 borrowers and depositors through at least 20 branches to be eligible for the licence.
Moreover, the information technology system used by the MFI interested to obtain licence must be reliable and it should have been using online system to submit required data to the central bank, according to the circular.
As per the NRB circular, MFIs must submit the minutes of the decision of its board of directors along with IT policy. MFIs must also submit product manual and user manual with applications to obtain the licence of payment service provider.
Also, MFIs wishing to work as digital payment service provider should have identified risks like market and system risks, among others. It also should have an agreement with a telecommunication service provider for the digital payment, as per NRB.
The central bank circular has further said that the online network connectivity between head office and the branches is a must to be eligible and MFIs must have short message system (SMS) facility for clients. The MFIs must take approval from NRB to provide the SMS facility to its clients, as per the circular issued by the central bank.
Source: The HimalayanTimes