NRB Issues Directive for Loan Restructuring: Up to Rs. 5 Crore Eligible, 10% Interest Relief Across Key Sectors

Nepal Rastra Bank (NRB) has issued crucial directives aimed at implementing measures announced in the monetary review, with a focus on loan restructuring and risk management. The guidelines, released on Sunday, provide a roadmap for financial institutions to navigate challenges posed by economic uncertainties.

The directives encompass a range of key areas, including loan restructuring and reclassification, risk provisioning for shares and housing loans, and installment ratios. Banking and Financial institutions are instructed to adhere to these guidelines in order to address the financial difficulties faced by borrowers.

Notably, the central bank has emphasized the importance of restructuring loans for borrowers facing economic hardships. The guidelines also address the rights of borrowers during times of crisis, ensuring that financial institutions actively engage in the restructuring process to accommodate the needs of those facing financial challenges.

One of the significant aspects of the directives is the provision for the reconstruction of loans up to Rs. 5 crores in various sectors, including agriculture, forestry, fisheries, food and beverage production, non-food commodity production, metal goods, machinery, and electrical equipment, transportation, wholesale and retail sales, tourism, education, and health. These sectors will benefit from a restructuring plan with a 10% interest rate.

This restructuring process is required to be completed by the end of Chaitra. However, it's important to note that loans active until Ashad 2080 are eligible for reconstruction, and a 5% provisioning is mandated for the management of such loans to mitigate potential risks.