KATHMANDU, March 4: Loans for commercial fruit farming will include a "general loan loss" provision of only one percent from now on.
Nepal Rastra Bank has issued unified directives to Class A, B, and C banks and financial institutions, applying this provision to loans taken for cultivating items such as silk, jute, cotton, mangoes, oranges, pomegranates, apples, kiwis, dragon fruit, lemons, lychees, and avocados.
For loans with a grace period of four years, the provision sets the general loan loss at 0.25 percent in the first year, 0.50 percent in the second year, 0.75 percent in the third year, and limits the loan loss to only 1 percent in the fourth year.
For energy and infrastructure projects with grace periods longer than one year, the loan loss provision will be distributed evenly over the grace period, with the final year having a maximum loan loss of only 1 percent. Previously, the loan loss provision for such loans was 1.10 percent.
Loans for projects that guarantee the expansion of production capacity will also include only a 1 percent loan loss provision. The unified directive states that for national priority projects such as hydropower, cable cars, cement, star hotels, and other infrastructure projects, if these projects are rescheduled or restructured, the loan loss provision will remain at 1 percent.
For vehicles, the loan-to-value ratio will be limited to 60 percent. This applies to all electric vehicles for any purpose and other personal vehicles for private use. Previously, licensed institutions provided loans for personal vehicle purchases up to 50 percent of the vehicle's value and up to 80 percent for personal electric vehicles.