February 25: The number of microfinance companies that do not distribute dividends to the investors is more than those that give dividends. Out of 55 microfinance companies listed in NEPSE, 15 have distributed dividends to their shareholders from their profits up to the last fiscal year (FY). Twenty seven such companies have already announced not to distribute dividends.

Himalayan Microfinance, Gurans Microfinance, Infinity Microfinance, Laxmi Microfinance, CYC Microfinance, Sadhana Microfinance, Mero Microfinance, Ganapati Microfinance, Manakamana Smart Microfinance, Upkar Microfinance, Community Microfinance, Forward Microfinance, Nadep Microfinance, Sabaiko Microfinance, Unnati Sahakarya Microfinance and Nerude Microfinance have decided not to distribute dividends.

Similarly, Gramin Bikas Microfinance, Nirdhan Uthan Microfinance, Kalika Microfinance, Kisan Microfinance, Mahuli Microfinance, Mahila Microfinance, Jalpa Community Microfinance, Win Nepal Microfinance, Mirmire Microfinance, Swabhiman Microfinance and Dhaulagiri Microfinance have also decided not to distribute dividends.

Last year, the profits of microfinance companies were affected due to the economic recession. On the other hand, strict regulatory provisions made them unable to distribute dividends.

The increasing bad loans of banks and financial institutions have affected other sectors as well. Experts say that because of the bad loans of banks and financial institutions, the profits of the listed companies have been directly affected, so they are unable to distribute dividends to the shareholders. Most of the companies that have declared dividends have passed them from the annual general meeting. Some are yet to pass the dividends.

The dividend rate of most of the companies opting to distribute dividends has decreased.

The Nepal Rastra Bank has made it mandatory for the companies distributing more than 15 percent dividends to keep 95 percent of the dividend above 15 percent in reserve fund. This has forced the microfinance companies to reconsider the dividend rate.

A few years ago, investors were attracted towards the shares of microfinance companies among the companies listed in the secondary market of securities. Investors used to trade shares of microfinance companies because of the attractive dividends. However, after the implementation of the new provision by central banks since last year, the share price of microfinance companies has been continuously falling. The share price of the company, which reached above Rs 5500 per share, has now dropped to Rs 1600 per unit.