KATHMANDU: Nepal Rastra Bank ( NRB ) has allowed banks and financial institutions (BFIs) to extend repayment deadline s by one year for borrowers whose projects have been damaged by the earthquake and for those who lost repayment capacity due to business losses.
In a directive issued on Wednesday, the central bank, however, said the BFIs could extend the deadline just once.
To avail the rescheduling facility, the borrowers should submit a written working plan and documents to the BFIs concerned to prove they genuinely lost the capacity to repay the loans within existing deadline as a result of the earthquake.
“If a borrower needs more than one year’s extension, the BFIs should take approval from the central bank,” states the directive.
According to the NRB , BFIs’ credit worth Rs38 billion has been impacted by the earthquake due to damage to projects and business losses faced by borrowers.
The BFIs can categorise the rescheduled loans under good loan, but they have to prepare a separate database of such loans.
The facility is available to borrowers whose loans were active until mid-April. The NRB said it eased the provision so that businesses of none of the borrowers are not ruined. If an earthquake-hit borrower pays instalments within mid-October, the central bank also allowed the BFIs to categorise the loans under good loans until the end of the next fiscal year, which begins in Mid-July.
The BFIs can make provisioning of such loans to the amount whatever is required for other good loans and they cannot charge penal interests to the borrowers for delay in repayment.
It a project cannot be completed within the set timeframe due to the impact of the earthquake, the BFIs can extend the grace period by one year. If the BFIs get interest of mid-July within Mid-October next fiscal year, they can show that interest income in the account of the current fiscal year.
The central bank has also taken measures to help BFIs headquartered in most quake affected districts outside the Kathmandu Valley.
The central bank will provide interest free credit of up to Rs5 million to A, B, C and D class financial institutions whose headquarters have been badly damaged and need reconstruction.
They have been exempted from any fine for not maintaining required cash reserve ratio until the next fiscal year. They won’t be fined until next fiscal year-end even if they failed to comply with the deprived sector lending directives.
