Banks can now count subsidized edu loans as deprived sector credit

July 12, 2018 05:35 AM Republica


KATHMANDU, July 12: The Nepal Rastra Bank (NRB) has introduced a provision in the Monetary Policy for Fiscal Year 2018/19 which allows banks to count loans against academic certificates, and higher education loans for students of marginalized and Dalit community, among others, as deprived sector lending.

The provision provides a sigh of relief to commercial banks which are struggling to meet the deprived sector lending requirement. The central bank requires banks to lend 5 percent of their total loan portfolio to deprive sectors.

The government has introduced these subsidized lending schemes through the budget for FY2018/19.

Unveiling Monetary Policy for FY2018/19 in Kathmandu, Nepal Rastra Bank (NRB) introduced a provision to implement programs introduced by government through the budget speech and also made it easier for banks to meet the mandatory lending requirement.

In the budget speech, the government announced to provide loans of up to Rs 700,000 at five percent subsidized interest rates against academic certificates as collateral in order to encourage youths to start business ventures. Similarly, the government has also announced to provide loans of up to Rs 1 million at five percent interest rate on group guarantee to Dalit community so that they can run businesses through cooperative or community-based productions.

Likewise, the government has announced a policy of providing education loans at five percent interest to students from economically deprived and marginalized community, and other targeted sector so that they can get higher education without any difficulty.

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