Issuing a circular Wednesday, the central bank unveiled a procedure on issuance of zero-interest loans, under which BFIs can seek interest-free loans of Rs 5 million from the central bank to open a branch in headquarters of 22 remote districts.[break]
If BFIs open a branch outside the district headquarters, the central banks will up the volume of interest-free loans to Rs 10 million.
To enjoy the facility, the BFIs are required to pledge government bonds or money deposited in central bank´s accounts in Thapathali as collateral and sign loans contract agreement with the central bank. They, however, will need to repay the loans within six months of issuance. There is a provision of pre-payment as well. But if the BFIs failed to repay it within six months, the central bank has said it will charge the highest interest rate that the given BFI has been charging to its customers.
The BFIs planning to seek zero-interest loans will need to formally approach the central bank with the decision of the board of directors. The central bank has said it is committed to make the whole loans issuance procedures simple and hassle free.
“The new circular has been issued as a part of our effort to implement the program announced in the monetary policy for this year. Hence, we have kept its process simple and convenient,” said an NRB official.
NRB Governor Dr Yuba Raj Khatiwada had announced in the monetary policy that the central bank will provide financial support to BFIs if they opened up branches in remote districts. NRB had mooted the program to encourage BFIs to widen and deepen their reach in the rural areas.
The central bank had said the program was targeted at increasing general public´s access to formal financial services.
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