Kathmandu, May 6

The Nepal Rastra Bank (NRB) is preparing to reduce the maximum limit of refinancing loans that businesses can take from its refinancing fund to ensure that more number of businesses have access to the subsidised loan facility to cope with the impact of coronavirus pandemic.

Currently, businesses can take refinancing loans of up to Rs 500 million through refinancing facility of the central bank at low interest rate of up to five per cent. However, as the number of loan-seekers from government’s refinancing facility is increasing and is expected to further rise due to COVID-19 impact, NRB is working to reduce the limit for refinancing loans to Rs 100 million.

“Bringing down the maximum loan limit through refinancing facility will ensure that more number of affected businesses have access to such types of loan during the ongoing pandemic,” said NRB Governor Maha Prasad Adhikari, adding that bringing down the refinancing loan limit to Rs 100 million will primarily help raise the access of SMEs, one of the needy sectors for such loans.

NRB is soon expected to raise the size of its refinancing fund to Rs 100 billion as directed by the government a week ago. As the business community has been seeking subsidised loan facility from the government to sustain their businesses and workers, the government has raised the size of refinancing fund twice over the last one month.

Adhikari said NRB intends to  facilitate maximum number of businesses through refinancing facility and mobilise resources from the fund primarily towards the production sector. Meanwhile, Governor Adhikari clarified that the central bank is not in a position to provide or direct banks and financial institutions to give waiver to any type of loan.

“This is not possible. However, we have already directed banks to bring down interest rate and delay loan repayment period for their customers,” said Adhikari. He also informed that the government will further extend the repayment period on loans if required.