The fund, which was supposed to provide economic relief to the industries and businesses battered by last year's devastating earthquakes and the Tarai turmoil, is yet to come into operation as the government has delayed allocating money to it.
It has already been two months since the Economic Rehabilitation Fund (Establishment and Operation Working Procedure) was issued. But the government is yet to even announce how much money it will contribute to the fund.
Due to lack of money in the fund, bank and financial institutions (BFIs) have not been able to extend interest subsidies and refinance facilities to affected factories and firms.
"The government's announcement of the relief came quite late. The implementation of the fund has now been further delayed. This has frustrated the many industries and business firms expecting to get the facility," Pashupati Murarka, the president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said. "The government should immediately disburse the funds and make it available to borrowers who were hit by the earthquake," he added.
The government has also not responded to a letter sent by Nepal Rastra Bank about two weeks ago regarding the providing of resources to the fund.
According to the central bank, BFIs have already made a commitment to contribute Rs 30 billion to the fund. BFIs will get 1.5 percent annual interest on the money that they contribute to the fund.
"The government was supposed to pledge resources and disburse it immediately. However, it has not responded to our letter seeking its commitment to the fund. The government should allocate the resources to the fund immediately for the fund to come into operation. Also, it should take diplomatic initiative to seek support from donor organizations," an official at NRB told Republica.
According to the working procedure of the fund, the government, bank and financial institutions (BFIs), international development partners, and interest from refinancing are the source of funds for the Economic Rehabilitation Fund. The plan was to pool a total Rs 100 billion to provide interest subsidy and refinancing facility to industries and business firms hit by recent 'unfavorable circumstances'.
According to the working procedure of the fund, industrial units and business firms affected by the earthquake and the Tarai turmoil will get to refinance loans of up to Rs 50 million at 1.5 percent interest under this scheme.
Similarly, borrowers will get interest subsidy of four percent for loans of up to Rs 100 million used between mid-July and mid-December while subsidy for loans used out of that period will be only 2 percent.
Industries and business firms related to agriculture, tourism industry, small and micro enterprises, and manufacturing industries, and affected by the earthquake, Tarai turmoil and Indian blockade were expecting to benefit from the schemes.
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