Kathmandu, January 5
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) - the largest private sector umbrella organisation - has said the revised Working Capital Loan Guidelines, 2022 is unable to address current economic downturn.
Issuing a press statement today, FNCCI has stated that the amended guideline has provided some relief to small and medium enterprises as the minimum limit has been increased and the payment period has been extended in case of credit exceeding the limit.
"However, the amendments are unable to address the other demands made by the private sector to keep the economy running in the current complex situation."
In the wake of widespread criticism from the private sector, Nepal Rastra Bank (NRB) had unveiled the amended guideline on Wednesday.
The federation has termed the provision of capping the loan amount to 25 per cent of the annual turnover for loans of over Rs 20 million as 'impractical' reasoning that working capital can vary depending on the nature of the industry.
Similarly, FNCCI has stated that it is necessary to increase the upper limit of working capital loans of permanent nature to 10 years, and it should be mentioned that personal guarantee is not required as it is stipulated that no other type of fixed or immovable property (such as house, land, etcetera) will be secured for working capital loans.
"It takes one to four months for the industries that import raw materials from abroad to produce goods, from the opening of the bill of lading, to the raw materials arriving at the industry through shipping, transit," the statement read.
"It is our suggestion that the Credit Recovery Act should be introduced without delay as it takes three to six months to collect the money from the market."
The federation has also demanded that arrangements be made for the restructuring and rescheduling of loans by the end of March.
"Also, we request the continuation of the refinancing facility received by the tourism sector. It is necessary for the central bank to use all financial and monetary tools to reduce the high interest rate to stabilise the economy."
A version of this article appears in the print on January 6, 2023, of The Himalayan Times.
