Kathmandu, March 19

Banks and financial institutions (BFIs) have been barred from revising the interest rate on loans that have already been issued. Nepal Rastra Bank (NRB) has instructed the banks and financial institutions to stick with the same interest rate that was fixed when the loans were floated to the respective borrowers.

The central bank today issued a circular to all the licensed BFIs stating that lending rates cannot be revised following a verdict to that effect by the Supreme Court. The NRB has also asked the BFIs to be careful regarding the social prestige and dignity of the borrower and family members while recovering loans. The central bank circular further instructs the BFIs to have respect and sympathy and opt for justified means while recovering credit.

The central bank issued the circular today to execute the verdict given by the apex court, which has directed BFIs on fair value calculation of the property that is going to be taken as collateral from the borrower against the loan. The circular also states that BFIs must auction the collateral or accept the collateral according to the prevalent market rates.