Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The new rule of working capital loan introduced by Nepal Rastra Bank (NRB) has come into effect from Tuesday. This comes amid strong criticisms made by the private sector against the new policy.
NRB made public a Working Capital Loans Related Guideline 2022 on August 23, targeting to enforce it from October 18. The rule seeks to tighten the noose on the loans being provided by the banks and financial institutions (BFIs) based on the working capital of firms.
Over the period, the private sector has been demanding the central bank to review the clauses maintained in the rule. However, NRB has been apathetic to the complaints of the private sector and has enforced the rule in its original form.
NRB has maintained two slabs for the BFIs when they issue loans against the working capital. According to the new provision, if a firm has an estimated transaction of Rs 20 million or less per year, it will be eligible to get loan only up to 20 percent of the turnover amount.
NRB has also capped the working capital loan for a big firm that has an estimated annual transaction of more than Rs 20 million. Based on the assessment of fluctuating working capital needs, the BFIs can issue a maximum of 25 percent of the annual transaction amount for the maturity period of up to one year.
Senior Vice President of Nepal Chamber of Commerce Kamlesh Kumar Agrawal said the stern measures on working capital loans will further worsen the financial burden for the private sector, which is already hit hard by soaring interest rates and restriction on imports.
Your email address will not be published. Required fields are marked *
Comment *
Name *
Email *
Website
Save my name, email, and website in this browser for the next time I comment.
