July 16, 2019 03:00 AM NPT
Relaxation on loan repayment deadline due to flood and landslides
KATHMANDU, July 16: Nepal Rastra Bank (NRB) has extended the deadline for the repayment of principal, interest and installment of loans by an additional 15 days.
The relaxation for the borrowers on the deadline comes in the wake of recent incidents of flood and landslide that have hit the country.
Releasing a circular to the licensed bank and financial institutions (BFIs) on Monday, the NRB said that it had decided to extend the deadline to one month after the expiry of the fiscal year, or by mid-August.
“The central bank has decided to provide this relaxation keeping in view the tragedy and losses caused by floods and landslides in various parts of the country. Even banks have not been able to operate in most of these areas due to the ongoing floods and landslides,” said Bam Bahadur Mishra, the acting executive director at the Banks and Financial Institution Regulation Department at the NRB.
“This new regulation implies that borrowers will have an additional 15 days for the repayment of the loans. While they have to pay the loans within 15 days of the fiscal year-end, the deadline has been extended by 15 more days to one month of the fiscal year-end,” he added.
Private sector organizations have lauded the central bank's decision.
Issuing a statement, the Confederation of Nepalese Industries (CNI) welcomed the decision of deadline extension.
Similarly, the NRB has also taken a flexible approach on the enforcement of the rule that requires bank and financial institutions (BFIs) in meeting the directed sector lending requirement.
In its circular issued to the BFIs on Monday, the NRB extended the deadline to meet the directed sector lending requirement by six months. While BFIs were required to comply with the directed sector lending requirement by mid January, the central bank has now allowed them to abide by the rule by mid-July. It has also said that it will impose fines for those not meeting the requirement from mid-July this year.
According to the directed sector lending requirement, a commercial bank must float 25 percent of loans to priority sectors while development banks and finance companies must float 15 and 10 percent of their loans on prescribed sectors.