Nepal Rastra Bank (NRB) has issued a circular to banks and financial institutions (BFIs) to implement the new provisions introduced through the first quarterly review of the Monetary Policy for the current fiscal year. The central bank recently made several additions and amendments during the review.
NRB has allowed the restructuring of loans disbursed to enterprises in Ilam and other districts affected by floods and landslides, based on borrowers’ requests. BFIs must analyze the borrower’s cash flow and income, recover at least 10 percent of the payable interest, and complete the restructuring process by the end of Chaitra.
During restructuring or rescheduling, loans must be classified under at least the same category as before, and loan-loss provisions must be maintained accordingly.
Additionally, BFIs are now permitted to issue personal loans—including overdrafts without specified purposes—up to Rs 10 million. If loans exceed this limit, BFIs must maintain a 100 percent loan-loss provision on the excess amount.
The central bank has also revised the interest rate on loans provided to licensed institutions under existing laws, fixing it at 5.75 percent, down from the previous 6 percent.
NRB has introduced new arrangements for “Class D” financial institutions as well. Individuals—whether affiliated with deprived or low-income groups or not—can now access up to Rs 1.5 million in microloans for agriculture, small enterprises, or other businesses by providing acceptable collateral. The previous limit was Rs 700,000.
Members of such groups may receive either a group loan or a collateral-based loan, but only one type at a time.
