Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The government has revised the working procedure for concessional loan interest subsidies, expanding the scope to include startup businesses for the first time. With the amendment, startups can now access cheaper loans under the concessional financing scheme, a move aimed at promoting innovation and entrepreneurship in Nepal.
According to the revised guideline, the government will provide an interest subsidy for up to five years on concessional loans. Banks and financial institutions will be allowed to charge up to 1.5 percentage points above the base rate, of which the government will subsidize three percentage points.
To qualify, a startup must meet specific conditions: it should be a private or partnership firm, company, or cooperative industry registered within the last 10 years, have an annual turnover not exceeding Rs 150 million, not have failed in past ventures, and must demonstrate innovative and creative ideas with strong growth potential. However, businesses not registered as an industry, import-oriented firms, blacklisted companies, and holding/investment companies are excluded from the facility.
In addition to startups, the government has increased credit limits under several concessional loan schemes. The loan ceiling under the Educated Youth Project has been raised from Rs 700,000 to Rs 2 million, while the self-employment loan for returnee migrant workers has been doubled from Rs 1 million to Rs 2 million.
Similarly, the Women Entrepreneurship Loan has been increased from Rs 1.5 million to Rs 2.5 million, and the Bhagat Sarbajit Enterprise Development Loan for the Dalit community has been expanded from Rs 1 million to Rs 2 million.
Furthermore, the ceiling for boiler replacement loans in industries has been set at up to Rs 5 million, while concessional loans for private housing construction for natural disaster victims will be available up to Rs 500,000.
The amended provision also specifies that once a concessional loan limit is approved, it cannot be revised upwards, and no more than one member from a single household will be eligible for the facility. The scheme will remain effective until mid-July 2030 (Asar 2087 BS).
For interest subsidy purposes, banks and financial institutions are required to determine the grace period, installment structure, and repayment duration based on loan type, amount, business objective, nature of operation, return period, and risk level.
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