Finance Ministry Cuts Microfinance Loan Interest Rates

Finance Ministry Cuts Microfinance Loan Interest Rates

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The Microfinance Business Supervisory Committee under the Ministry of Planning and Finance (MOPF) issued Directive (1/2019) to revise interest rate for microfinance loans and saving on June 5. The new rates are to take effect on June 1, but the announcement was released after four days of the effective date, causing microfinance institutions to be in a difficult position.

The committee amended the interest rate where a loan of K100 monthly will be charged K2.30 and the yearly maximum interest rate will be 28 percent. The previous rate was for K100 monthly at K2.50 and the yearly maximum interest rate is at 30pc. In comparison, the directive has decreased 2pc of the yearly interest rate. Furthermore, the new interest rate on compulsory saving will be for K100 monthly, it will be charged K1.20; while the annual minimum interest rate has been cut by 1pc to 14pc. The previous specification was for K100 monthly it will be K1.25 with the yearly minimum interest rate at 15pc.

Interest rate on voluntary saving remained the same. The directive designated that for K100 monthly, the amount charged will be K0.80 and the yearly minimum interest rate will be 10pc. Currently, the finance ministry in April 2019 has allowed microfinance licence to 3 INGOs, 16 NGOs, 47 foreign financial institutions, 110 local, and 5 partnership – a total of 181 microfinance providers.

Source: Myanmar Times 

 

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