This is the Nepal Rastra Bank's Revised Directive to Ease Transition from Pandemic-Ensued Banking Economy

Nepal Rastra Bank has given exemption in loan loss management (provisioning). In a directive issued on Tuesday, the central has lifted the provisioning requirement for loans up to Rs 25 lakhs.

Nepal Rastra Bank has revised the list of loans under its close watchlist. In the case of loans provided to projects under construction, the project was to be closely monitored only on the basis of the financial statements of the two full fiscal years after the project started commercial production. Now, the period has been increased from two years to three years. 5 percent provisioning was to be made for loans that fell under close monitoring. Now, only 1.3 percent provisioning is required.

Nepal Rastra Bank has also implemented a new system of calculating the loan-to-deposit ratio. As a result, the credit capacity of banks and financial institutions has increased by Rs 1.5 Kharba. In the monetary policy, it is mentioned that the CD ratio should be maintained at 90% by banks and financial institutions by Ashar 2079 BS by scrapping the current CCD ratio.

From now on, variable interest rates, as well as fixed interest rates of all periodic loans provided by banks and financial institutions, will have to be published. Earlier, the concept of a fixed interest rate was only for loans with a repayment period of more than one year. The cost of co-financing loans has also been reduced.

The central bank has made it possible for debtors negatively affected by the pandemic to reduce the installment amount and extend the repayment period. NRB has also made an arrangement that such a loan paid by reducing the installment will not be considered as restructuring or rescheduling.

Those who are in agriculture, handicraft, and skill-based businesses and enterprise up to Rs 1 crores will be able to get a loan by paying an additional 2 percent premium at the base rate. If one wants to take a loan of up to Rs 20 lakh under the aforementioned sectors, one can also pledge the land that does not have access to a motor road. Previously, the pledged land had to be accessible by road.