Nepal Rastra Bank Issues New Circular; Lifts Rs. 20 Crore Cap on Institutional Share Collateral Loans
The Nepal Rastra Bank (NRB) has issued a second circular to implement the provisions announced in the monetary policy for the fiscal year 2081/82 BS.
The NRB has removed the Rs. 20 Crores limit on margin lending for promoter shares. In a circular issued on Friday to implement the monetary policy, the central bank has set a maximum limit of Rs 15 crore for margin loans secured by shares for a single customer from any or all licensed institutions. However, this limit will not apply to institutional investors established primarily for investing in the stock market. Previously, a limit of Rs. 20 Crores was set for institutional investors.
Additionally, the NRB has mandated that forced loans resulting from guarantees claimed by construction contractors must be blacklisted only if the loans are overdue by one year in the fiscal year 2081/82.
For the construction sector, the NRB has introduced a provision for the utilization of fund-based loans of Rs. 50 Crores or more and non-fund-based loans of Rs. 1 Arba or more.
Furthermore, investments made by public institutions and public limited companies in energy bonds and other energy-related debt instruments will be counted towards the investment limit specified for the energy sector.
Licensed institutions are required to limit the interest rate to a maximum of 2% above the base rate for loans up to Rs 2 crores provided for food production, livestock, fisheries, agriculture support industries, agricultural tools manufacturing, export-oriented industries, handicrafts, skill-based businesses, information technology, tourism, and other enterprises related to domestic production, excluding import-related businesses.
For loans up to Rs. 20 lakh in the aforementioned categories, banks and financial institutions may accept arable land without motorable roads as collateral. Each branch must approve such loan applications within seven working days, or if not approved, provide the applicant with a clear written explanation of the reasons.
