Considering the impact of the coronavirus pandemic, Nepal Rastra Bank (NRB) today announced that the repayment period of loans taken by the affected businesses will be allowed to be rescheduled.
While reviewing the Monetary Policy for the current fiscal year 2020-21, NRB Governor Maha Prasad Adhikari announced of such concession for businesses.
According to the new arrangement made by the central bank, loans can be rescheduled by paying five per cent of the outstanding interest by mid-July of this year.
Earlier, the NRB had made an arrangement to reschedule the loan repayment for debtors who had been good borrowers by paying 10 per cent of the outstanding interest till mid-January of 2021.
NRB has extended the loan rescheduling period by six months. For the process, the NRB has asked the banks to allow lowering of the interest rate to five per cent till mid-July, especially since the entrepreneurs in the tourism sector have not been able to pay even 10 per cent of the outstanding interest. “We have tried to facilitate the banks and industrialists,” said the governor.
According to the governor, if a borrower submits a written action plan by mid-July, the banks and financial institutions can analyse it and make arrangements to restructure and reschedule the loan by collecting at least five per cent of the outstanding interest.
Similarly, electronic payment transactions will be encouraged, said Governor Adhikari. The Monetary Policy has been reviewed to take strict action against the banks that do not invest in the specified areas.
The existing provisions, including mandatory cash ratio, statutory liquidity ratio have been kept same, while valuation ratio of loans has also been kept intact. However, as economic activities return to normal, these policies will be reviewed, the governor said.
The Monetary Policy review also states that concessional loans to hydropower projects with a capacity of less than 10 MW will be prioritised.
Meanwhile, the report has stated that consumer price inflation has remained within the government’s target. The foreign trade deficit has also improved and remittance inflows have increased by 11 per cent, the governor said. He said that the current account is in deficit but the balance of payments is in surplus and foreign exchange reserves were in good condition.
Stating that the deposit mobilisation has increased in an encouraging manner and the credit flow is also good, the governor said that the COV- ID-affected individuals seem to be making good use of the concessional loans.
He further said that interest rates have been gradually declining and financial access has also improved. The governor said that the branches of commercial banks will soon reach the remaining four local levels as well.
Source :The Himalayan Times.