Kathmandu: Nepal Rastra Bank (NRB) has introduced a special loan rescheduling and restructuring facility for construction contractors facing financial difficulties due to delayed payments from government agencies.
The provision has been incorporated through an amendment to the central bank’s Unified Directives, aiming to provide temporary financial relief to contractors whose projects have been completed or are under construction but whose payments remain pending despite confirmed government funding.
Relief for Cash-Strapped Contractors
Under the revised directive, banks and financial institutions (BFIs) are permitted to reschedule or restructure eligible loans upon the borrower’s request after assessing the contractor’s cash flow, repayment capacity, and the justification for restructuring.
To qualify for the facility, borrowers must first pay at least 10 percent of the outstanding interest on the loan.
The NRB has instructed that all eligible loan rescheduling and restructuring under this provision must be completed by the end of the third quarter of the current fiscal year.
Five Percent Loan Loss Provision Required
The central bank has also directed banks to maintain a minimum loan loss provision of 5 percent for loans that are rescheduled or restructured under the new arrangement.
However, the facility does not alter the regulatory treatment of loans that have already been classified as non-performing loans (NPLs). Such loans will continue to be classified and provisioned under the existing prudential framework.
Official Proof of Pending Government Payment Required
To access the facility, construction entrepreneurs must submit official documentation confirming that payment is due from the relevant government agency or public authority.
The NRB said the requirement is intended to ensure that the relief measure benefits only genuine contractors affected by delayed government payments rather than borrowers facing unrelated financial difficulties.
Aimed at Supporting the Construction Sector
The latest policy comes amid mounting concerns over liquidity constraints in Nepal’s construction sector, where many contractors have struggled with delayed payments for completed public infrastructure projects.
Industry representatives have repeatedly argued that payment delays have weakened contractors’ ability to service bank loans, pay suppliers, and undertake new projects. The central bank’s latest directive is expected to ease short-term financial pressure while helping banks manage stressed construction-sector loans more effectively.
