NRB relaxes some regulations; BFIs get some room to breathe when it comes to credit regulation

The Nepal Rastra Bank (NRB) has relaxed some of its regulation regarding credit regulation and CRR. The NRB has relaxed the regulation due to decrease in economic activities arising from unfavorable situations. 1.In its circular NRB noted that sectors like Industry, Business, Tourism, energy have been affected from economic shrinkage. The relaxation on some of the regulations in unified directive 2072 is being granted at the request from Bank and Financial Institutions (BFI). These relaxations will only apply to loans which were at good standing during the end of Chaitra 2071. Here are the lists of relaxed regulation from the central bank: A. Loan Loss Provision If a borrower is able to pay principal, interest or installment of a loan by the end of Poush 2072, then such loan can be categorized as good loan. The loan loss for such loans should be provisioned accordingly. No penalty or additional fees can be collected from loans categorized as good loans using this section. B. Restructuring of loan BFIs can restructure a loan repayment for one time for maximum period of one year using following guidelines:

1. The borrower must present written work plan
2. BFI must be satisfied that the borrower can repay the loan
3. Restructuring of loans must be done by Poush 2072

The loans under this section can be categorized as good loans and BFIs must maintain separate list of such loans C. Income and Expenditure If an interest for the period of first quarter of this fiscal year is received by the end of Kartik 2072, then such interest can be listed as income in the book. D. Grace Period If an ongoing project requires more time to complete or project has been completed but its grace period is ending, then a maximum grace period of a year can be added. E. Trust Receipt Loan (TR Loan) Existing 120 days has been extended to 180 days for the Trust Receipt Loan or similar import loans. The loans issued under this section must be collected by the end of Chaitra 2072.

2. Period from Kartik 01 to Kartik 14, 2072 should be counted as a week for the purpose of meeting requirement of minimum deposit due to public holidays on the auspicious occasion of Dashain festival.

  NRB Circular