NRB allows rescheduling of loan payment period

Considering the impact of the coronavirus pandemic, Nepal Rastra Bank announced that the repayment period of loans taken by affected businesses will be allowed to be rescheduled on February 14.While reviewing the Monetary Policy for the current fiscal year 2020-21, NRB Governor Maha Prasad Adhikari announced such concession for businesses. According to the new arrangement made by the Central Bank, loans can be rescheduled by paying 5% of the outstanding interest by mid-July of this year. Earlier, NRB had made an arrangement to reschedule the loan repayment for debtors who had been good borrowers by paying 10% of the outstanding interest till mid-January of 2021. NRB has extended the loan rescheduling period by six months. For the process, NRB has asked the banks to allow lowering of the interest rate to 5% till mid-July, especially since entrepreneurs in the tourism sector have not been able to pay even 10% of the outstanding interest. According to the Governor, if a borrower submits a written action plan by mid-July, banks and financial institutions can analyse it and make arrangements to restructure and reschedule the loan by collecting at least 5% 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 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%. The Governor said that the current account is in deficit but the balance of payments is in surplus and foreign exchange reserves were in good condition.