Nepal Rastra Bank (NRB) has revised and amended the Working Capital Loans Guidelines, 2079, which came into effect last October, and in case of exceeding the loan limit, has extended the payment period and also increased the minimum limit. This will provide entrepreneurs with more time for payment while small entrepreneurs will get relief, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) stated in a statement issued on Thursday. Although these arrangements are positive, it is necessary for the government and the central bank to address other demands put forth by FNCCI in order to keep the economy running in the current situation, the statement said.
The requirement of Working capital amount varies depending on the nature of the industry, so it does not seem practical to make the limit of working capital loans at 25% only for more than Rs 20 million, according to FNCCI. Similarly, it is necessary to increase the upper limit of working capital loans of permanent nature to 10 years.
It should be mentioned in the guidelines that personal guarantee is not required for working capital loans since it has been stipulated that no other types of immovable property (such as house and land) will be secured except for movable property, the private sector’s organisation suggested.
In addition, FNCCI has demanded to scrap the arrangement that requires all renewable working capital loan accounts to maintain zero arrears for at least seven consecutive days at any one time of the fiscal year.
It takes up to four months for the industries that import raw materials from abroad to produce goods. It is our suggestion to introduce Credit Recovery Act as most of the produced goods are delivered to the market on credit and it takes three to six months to collect money from the market.
The federation demanded that arrangements be made for the restructuring and rescheduling of loans by mid-April, 2023 instead of mid-December.
