Rastra Bank issues Unified Directives 2075; See the major changes

Nepal Rastra Bank has published Unified Directives 2075 and has addressed various changes for the banks and financial institutions.

As per the unified directives, the loans which have defaulted their payment by 1 month are to be excluded from the ‘Pass’ loan category. Previously, loans that have missed out their payments upto 3 months were termed as pass loan. So, the banks and financial institutions need to create a provision of 5% in case the delay in payment exceeds 1 month.

Similarly, the ‘C’ class banking institutions i.e. national level finance companies will be able to provide overdraft loan. But the ban on hypothecation loan remains the same.

The directive has also increased the loan limit to Rs 50 lakh to be provided to Cottage and Small Scale Industries. The previous limit stood at Rs 25 lakh. The loan limit for the loans against road less agricultural land has also been increased to Rs 20 lakh from Rs 10 lakh.

Rastra Bank has discarded the Financial Revival Fund. Similarly, the bank cannot capitalize the interest matured in the grace period, but in case of the projects of national priority, the BFIs can capitalize the interest after taking prior approval of Nepal Rastra Bank.

Previously, banks had to provide details to Rastra Bank to the loans upto Rs 2 crore but after the directives 2075, the commercial banks should provide the details of loans upto Rs 5 crore. ‘B’ and ‘C’ class banking institutions should provide the details of loans upto Rs 2 crore.