NRB publishes a circular regarding loan rescheduling and restructuring

KATHMANDU: The Nepal Rastra Bank (NRB) has sent a circular to banks and financial institutions outlining the loan restructuring and rescheduling arrangements that were put into place as a result of the third review of the monetary policy for the current fiscal year 2022–23.

The central bank has enforced the agreement that loans mobilized in the hotel and restaurant, livestock, and loan related to construction sectors, as well as loans up to Rs. 50 million mobilized in other sectors, can be restructured and rescheduled as of the upcoming June 15.

By examining the cash flow and income of the industry and business at the request of debtors, the central bank’s Wednesday circular states that loan rescheduling and restructuring can be done after repayment of at least 10% of the outstanding interest amount.

The implementation of the arrangements is also subject to the following four requirements. According to the central bank circular, “the loan classified as an active loan up to April 13 can only be restructured and rescheduled.”.

On the restructured and rescheduled loan, a provision of 5% credit loss must be made. The circular added that these loans could be used in the cluster where they were assigned.

It should be noted that the NRB had softened some monetary arrangements through its quarterly review of monetary policy.