Under the new arrangement, commercial banks fulfilling the conditions set by the central bank can now acquire the export refinance at an interest rate of 1.5 percent per annum. The banks, in turn, are required to invest the resources at annual interest rate not exceeding 4 percent. [break]
Issuing the fresh directives to the financial institutions of Class A category, NRB has also said that only the commercial banks that have maintained NRB´s capital adequacy requirement (CAR) and other prudential norms will get finances under the facility.
“NRB can reject the refinancing applications of the banks that have not adhered to its CAR and have not upgraded their paid-up capital as per the capital plan schedule,” states the directives.
The directives also mention the list of export sectors that can enjoy the soft loans under the facility.
Large cardamom, ginger, tea, coffee, handicrafts, honey, juice, herbs and other agro processing industries, handmade paper, silver jewelry, computer software, jute, leather products, pashmina, garment, carpet, woolen carpet, noodles, thread, polyester yarn and iron steel are among the export industries that can enjoy the facility.
NRB has further notified that the government has allocated a fund of Rs 1 billion for providing export refinancing facility. “Of that, large and medium scale industries, cottage and small industries and agro-processing industries will each get loans up to Rs 300 million,” says the directives. Other exports sector, on the other hand, will get soft loans up to Rs 100 million.
The central bank has also capped the loans amount for each borrower as well. For large and medium scale industries, the limit for each borrower has been fixed at Rs 30 million, while for cottage and small industries and agro-processing, the single-party loan limit has been fixed at Rs 7.5 million.
It has also said that refinancing facility will be pledged on the basis of export or letter of credit or export documentary bill of the firm. At most, the exporting firms will get up to 80 percent of the total finances they have sought, and they need to repay the loans within four days of receiving the payment from abroad.
“Firms can pre-pay the loans as well,” states the directives, adding that the firms seeking refinancing facility should, however, be clean on the records of Credit Information Bureau.
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