Government Introduces Rs. 15 Lakh Concessional Loans for Gen-Z Martyrs’ Families and Injured
The Government of Nepal has approved and implemented the second amendment to the “Interest Subsidy Procedure for Concessional Loans, 2082”, introducing new loan categories, revised lending limits and additional support for targeted groups.
The Ministry of Finance approved the amendment at the ministerial level on Shrawan 22, 2083, and the Nepal Rastra Bank (NRB) has instructed Class A, B, C, and D licensed banks and financial institutions to implement the revised provisions.
Under the amended procedure, concessional loans will be available under several categories with revised ceilings. The maximum loan limits are:
1. Agriculture and Livestock Loan: Up to Rs. 5 crore
2. Women Entrepreneurship Loan: Up to Rs. 25 lakh
3. Foreign Employment Returnee Youth Self-Employment Loan: Up to Rs. 20 lakh
4. Educated Youth Project Loan: Up to Rs. 20 lakh
5. Bhagat Sarvajit Entrepreneurship Development Loan for Dalit Communities: Up to Rs. 20 lakh
6. Startup Enterprise Loan: Up to Rs. 25 lakh
7. Boiler Replacement Loan for Industries: Up to Rs. 50 lakh
8. Private Housing Construction Loan for Natural Disaster Victims: Up to Rs. 5 lakh
9. Self-Employment Enterprise Loan for Families of Gen-Z Movement Martyrs and Injured Persons: Up to Rs. 15 lakh
One of the major additions under the second amendment is a self-employment enterprise loan targeting families of martyrs of the Gen-Z movement and people injured during the movement. Under the provision, the spouse, son, daughter, or parents of a person who died as a martyr during the Gen-Z movement, as well as individuals injured during the movement, can obtain concessional loans of up to Rs. 15 lakh.
The loan can be used to establish productive and employment-generating businesses in sectors including agriculture, cottage and small industries, information technology, tourism and other productive activities. Applicants must be certified as members of a martyr’s family or as injured persons by the Government of Nepal or an authorized body.
The government will provide a 3 percent interest subsidy on eligible concessional loans. Banks and financial institutions must determine the interest rate by adding no more than 1.5 percentage points to their applicable base rate. Apart from the applicable interest, credit information fee, and insurance premium payable by the borrower, banks and financial institutions may not impose any other additional charges.
Borrowers will receive the government interest subsidy for a maximum period of five years. Banks and financial institutions must determine the grace period, installment structure and repayment period based on factors including the type and amount of loan, its purpose, nature of the business, expected return period and level of risk.
Once a concessional loan is approved, its limit cannot subsequently be increased. The revised procedure also states that only one member of a household can obtain a concessional loan under the scheme. Such loans can be provided only until the end of Ashadh 2087.
The amended procedure has also introduced a specific timeline for banks and financial institutions to process applications. Banks must make a decision on a loan application within 15 working days of receiving all required documents. If the loan is rejected, the applicant must be informed in writing within three working days, along with the reasons and basis for the rejection.
Applicants are required to submit documents including the bank's loan application form, business registration documents, Permanent Account Number (PAN) certificate, tax clearance certificate, citizenship or national identity card, a brief business and loan-utilization proposal, and guarantee-related documents, as applicable. Business registration, PAN, and tax clearance documents are not required for loans intended for private housing construction by natural disaster victims.
To qualify for the concessional loan, applicants must generally be at least 18 years old, Nepali citizens, and not listed on the Credit Information Centre's blacklist. They must also meet other conditions specified under the procedure. Except for the disaster-affected private housing loan, applicants must have a registered institution or business and a PAN certificate. For women entrepreneurship loans, 100 percent ownership of the enterprise must be held by women.
For loans targeting youths returning from foreign employment, applicants must have obtained labour approval, worked in a foreign country for at least six months, and returned to Nepal. Individuals who have obtained permanent residency in another country will not qualify. For collective-guarantee loans, the group must consist of at least five members from different families, each aged 18 or above. For natural disaster victims seeking housing loans, the applicant must not have received institutional housing assistance other than the government's designated private housing grant and must not have another habitable house registered in the family's name.
The amended procedure has also defined the enterprises that qualify as startups. An enterprise will generally qualify if it has been registered for no more than 10 years, is registered as an industry under the applicable legal framework, and has not recorded annual turnover exceeding Rs. 15 crore in any financial year after establishment. The enterprise must be based on a new and innovative idea with potential for rapid growth.
Businesses that are not registered as industries, primarily import and distribute foreign goods or services, are blacklisted under prevailing laws, or are registered as holding or investment companies will not qualify as startups under the provision.
Banks and financial institutions are required to lend against the business project, supported by personal or group guarantees from members of the same household, as applicable. The viability of the project must be given primary consideration when assessing the loan.
For loans of up to Rs. 15 lakh, 50 percent of the credit guarantee fee will be borne by the concerned bank or financial institution, while the remaining 50 percent will be reimbursed through the subsidy reimbursement account maintained at Nepal Rastra Bank. For loans exceeding Rs. 15 lakh, the credit guarantee fee will be borne by the concerned bank or financial institution.
The amended procedure also provides partial support for insurance premiums. For loans of up to Rs. 15 lakh, the borrower will bear 50 percent of the applicable insurance premium, while the remaining 50 percent will be reimbursed from the subsidy reimbursement account through the Nepal Insurance Authority to the concerned insurance company. For loans exceeding Rs. 15 lakh, the borrower will be responsible for the full insurance premium.
The procedure allows the government to recover the entire interest subsidy received, along with interest, if the concessional loan is found to have been misused. The scheme is aimed at expanding access to affordable financing for agriculture, entrepreneurship, startups, employment generation, industrial modernization and disaster recovery, while extending targeted financial support to families of Gen-Z movement martyrs and those injured during the movement.
