Nepal Rastra Bank announces new measures to support construction sector

KATHMANDU: Nepal Rastra Bank (NRB) has introduced new policies to facilitate the construction sector in its monetary policy for the current fiscal year. In response to the downturn in the construction industry, NRB has extended the repayment period for loans taken by construction businesses until the end of Mangsir 2081 (December 2024).

Additionally, NRB has implemented measures to ease the blacklisting process for construction businesses. Under the new policy, construction businesses will not be blacklisted solely based on dishonored checks.

The new monetary policy also addresses the need for separate arrangements regarding the credit rating of banking facilities and loans utilized outside of the collateral.

The policy stipulates that loans created during the fiscal year 2081/82, which are backed by construction guarantees, should be classified and treated similarly to other loans, including loan loss provisions.

Furthermore, the policy ensures that the blacklisting of any Joint Venture (JV) partner will not affect the banking operations of other JV partners.

The updated policy also includes provisions for the renewal of guarantees provided by banks and financial institutions in the event of an extension of government construction deadlines.

These measures are aimed at supporting the construction sector during challenging times and ensuring smoother financial operations for construction businesses.