NRB to provide Rs 112 billion refinance facility to sectors hit hard by Covid 19

Commercial banks across the country have started to take in applications from borrowers to deliver them refinance facilities. The refinance facility has been introduced by the central bank to assist businesses affected by Covid 19 under the provision made in the monetary policy for the current fiscal year 2020-21. The facility subsidises the interest rate for borrowers and is to be available for six months, with an option of extension of six months. As per the policy, exports and sick industries as well as other sectors will get special refinancing facilities at a maximum 3% interest rate, while micro, cottage and small industries will get credit at a maximum 5% interest rate. After the central bank called applications on August 17, with a deadline of one and half months, commercial banks have started to collect applications from their borrowers. As per the central bank notice, sectors that have been worst affected and sectors which have faced middle-level impact can apply for the facility. As per the monetary policy, the central bank has promised to provide 70% refinance support by accumulating applications collectively from borrowers. Under this facility, refinancing of up to Rs 50 million will be available for each customer. For bigger projects, such as hydropower projects, the central bank has made the provision of providing 20% of total as refinance amount. A borrower can get up to Rs 200 million under this window. The amount is expected to differ on case to case basis. For microfinance institutions, the central bank will channelize 10% of the total refinance fund. “Under the first window, a fund of around Rs 112 billion will be available for refinancing,” said Dev Kumar Dhakal, Chief of the Regulations Department at Nepal Rastra Bank. As per NRB’s notice, the tourism sector, including travel, hospitality and aviation sector, movies and theatres, poultry, livestock, fishery, handicrafts and readymade garment among others are the most affected sectors. Likewise, sectors which faced middle-level impact such as schools, transportation services, beauty parlours, legal and engineering firms, construction industry, pharmaceutical industries, fitness centres, media houses and hydropower projects will also get refinance facility. In order to provide the subsidised loans, the central bank will make available resources to commercial banks at low (1, 2 and 3 percent) interest rates.