NRB vows refinancing pill for COVID-19 ills

Kathmandu, March 2

Nepal Rastra Bank (NRB) has said that refinancing facility will be provided on loans issued in sectors that have been affected by the coronavirus outbreak.

Releasing the mid-term review report of the Monetary Policy of fiscal year 2019-20 this evening, the central bank said that it will identify sectors that could be affected by the coronavirus outbreak and ensure refinancing and restructuring of loans issued to these sectors.

The central bank, through the mid-term review of the Monetary Policy, has also said that the spread of coronavirus and its direct impact on tourism and trade will affect Nepal’s economic growth target in 2019-20 fiscal. However, ongoing construction and completion of different mega projects in the current fiscal year will give momentum to economic growth, as per NRB.

Through the mid-term review of Monetary Policy, the central bank has raised debt-to-income (DTI) ratio on loans issued by BFIs for individuals who are constructing/purchasing house for the first time to 60 per cent from 50 per cent. The DTI ratio is the percentage of one’s gross monthly income that goes to paying his or her monthly debt payments.

Against existing provision, which requires BFIs to seek tax clearance certificate from the borrower companies while granting loans, the central bank through the mid-term review of Monetary Policy has allowed BFIs to disburse loans of up to Rs 20 million without such certificate.

Similarly, the loan-to-value ratio on real estate business has been fixed at 50 per cent within the Kathmandu valley and 60 per cent beyond the valley.

However, NRB has made no changes in the loan-to-value ratio on auto loans even as the automobile dealers had long been pressuring the government for the ratio to be revised.