Kathmandu, October 16

Nepal Rastra Bank (NRB), the central bank, will introduce a relief package for borrowers, whose cash flow has been affected by the ongoing protests in the Tarai, before Tihar festival.

“We are still working on the package. We will introduce it before the Tihar festival (which falls in the second week of November),”  said.NRB Deputy Governor Maha Prasad Adhikari

Adhikari had earlier told The Himalayan Times that the relief package would include debt restructuring facility, deferment in credit payback period and grace period for loan repayment.

NRB is mulling over deferring the loan repayment period till mid-January or till mid-April so that borrowers hit by the Tarai protests get ample time to pay the instalments. Banks and financial institutions will not be allowed to slap fines or take extra charges while extending the principal and interest payment period.

Nepal Bankers’ Association, the umbrella body of commercial banks of the country, has agreed to extend the loan repayment period, although it is asking the central bank to limit it to less than three months.

NRB had introduced a similar provision in the aftermath of the devastating earthquakes. At that time NRB had directed banks and financial institutions to extend principal and interest payment period from July 16 to October 17.

Among others, NRB is also mulling over asking banking institutions to restructure debt of borrowers and extend grace period to projects hit by the Tarai protests so that instalment payments can be deferred.

NRB is under pressure from the private sector to immediately launch the package as almost all of the sectors have been hit hard by the Tarai protests and irregular supply of goods from India.

Most of the factories in industrial belts of Hetauda, Birgunj-Pathlaiya, Sunsari-Morang and Lumbini have been shut down because of scarcity of raw materials and diesel to run plants during loadshedding hours. The tourism sector is also feeling the brunt, with hotels reporting average room occupancy rate of 25 to 35 per cent in the peak tourist season.

Many schools, on the other hand, have given extended Dashain vacation beginning tomorrow, as there is no fuel to ferry students in buses, while hospitals have started facing shortage of life-saving drugs and oxygen.

Even agriculture sector has been badly affected this time, with many farmers facing shortage of fertilisers and feeds for poultry.

“The cost of all the disruption stands at over Rs two billion per day, which means the economy will suffer badly this year,” said Pashupati Murarka, president of the Federation of Nepalese Chambers of Commerce and Industry, the largest umbrella body of the private sector.