KATHMANDU, Dec 29: The government has amended the working procedure of Economic Rehabilitation Fund, allowing bank and financial institutions (BFIs) to seek new applications from industrialists and entrepreneurs who uncured loss due to unofficial economic blockade imposed by India and the unrest in Tarai districts last year.
While the BFIs have said that the applications received earlier could not be processed due to lack of money in the fund, others could not apply for the subsidy due to short deadline.
Issuing a circular on Sunday, the Nepal Rastra Bank (NRB) has instructed the BFIs to seek applications from business firms and industries which were hit by Tarai unrest, earthquakes and the unofficial economic blockade.
An earlier provision in the working procedure required BFIs to call applications from such industrialists and entrepreneurs within 15 days of the guidelines coming into implementation with a deadline of a month.
The working procedure was issued on December 25 last year, and BFIs called for applications accordingly.
Bankers had told Republica at that time that there were only few applications for the government-announced facility. Now, BFIs will have to seek applications from business firms within 15 days.
The fund allows business firms and industries affected by earthquake and Tarai unrest to get interest subsidy on loans they had borrowed and cheaper credits.
There was actually not a single rupee on the fund announced to be of Rs 100 billion until recently. The government recently disbursed Rs 5 billion for the fund, while the BFIs, who had committed to put nearly Rs 28 billion, are still to do so. Another source of funding --bilateral and multilateral donors - have not made any commitment for funding yet.
While setting up Economic Rehabilitation Fund of Rs 100 billion, the government had said that the fund will provide refinancing of 1.5 percent to loans of up to Rs 50 million that the BFIs float to affected borrowers under the scheme at a maximum of 5 percent interest. Similarly, borrowers will get interest subsidy of four percent for loans of up to Rs 100 million used within mid-July to mid-December while the subsidy for loans used more than that will be only 2 percent.
Borrowers from agricultural sector, tourism industry, small and micro enterprises, and manufacturing industries, who have been affected by the earthquakes and Indian blockade, were expected to be benefited from the subsidy scheme. Similarly, industries, tourism sector, including hotels and restaurants, hydropower projects, agricultural sector, and real estate companies can also get refinance facility under the scheme.
According to the working procedure, business firms or industries interested to get the subsidy have to prove that their production or transactions had gone down by less than 50 percent in the first six months of the last fiscal year 2015/16 compared to the corresponding period of the previous fiscal year 2014/15 due to earthquakes and Tarai unrest.
Firms, who had applied earlier, are not required to submit their application again, according to the circular.
Revised interest rate corridor system introduced
