Kathmandu, May 21

Nepal Rastra Bank has decided to reduce the maximum limit of refinancing loans for businesses within a few days to ensure that small and medium enterprises have access to the subsidised facility of the central bank.

Gunakar Bhatta, spokesperson for NRB, said the central bank would soon reduce the maximum limit of such loans issued to businesses and simplify procedures to acquire loans primarily to ensure that more businesses have access to these loans, specially SMEs.

Though NRB is providing loans under its refinancing facility, only large businesses had been accessing such facilities from the central bank.

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

Earlier, Governor Maha Prasad Adhikari had publicly said the maximum limit of refinancing loans for businesses would be brought down to around Rs 100 million.

“Limited access of SMEs to such loans is also due to procedural hurdles, which the central bank will simplify soon by scrapping some procedures,” added Bhatta.

As per the central bank’s statistics, refinancing loans worth Rs 18 billion have been floated in the market so far, while NRB’s refinancing fund still has Rs 42 billion.

Shekhar Golchha, senior vice-president of the FNCCI, welcomed NRB’s plan to increase access of small enterprises to such loans.

“SMEs are the real drivers of the economy and they have been hit hard during this crisis. We had urged the central bank to boost access of such subsidised loans to small businesses,” he said.

A version of this article appears in e-paper on May 22, 2020, of The Himalayan Times.