NRB directs BFIs to halt loan recovery till mid-July
Kathmandu, March 29
Amid businesses affected by the coronavirus seeking relief from the government, Nepal Rastra Bank (NRB) has set moratorium on principal and interest payments till mid-July.
Issuing a circular today, the central bank has asked banks and financial institutions (BFIs) to defer the collection of monthly or quarterly instalments (that were to be collected by mid- March) from borrowers till mid-July. The provision is applicable to all borrowers, including credit card borrowers, as per NRB.
Moreover, NRB has also directed BFIs not to take any penal charges or penal interest on instalments that borrowers should pay banks as of mid-March.
In case if any borrower makes monthly/quarterly payment within mid-March, central bank has also asked BFIs to give 10 per cent discount on interest rate.
A few days ago, the meeting of the Financial Sector Management and Coordination Committee led by Finance Minister Yubaraj Khatiwada had directed BFIs, as well as non-banking institutions, to halt the collection of principal and interest on loans disbursed in sectors hit by the coronavirus.
Similarly, NRB has also raised the size of refinancing fund by Rs 10 billion to Rs 60 billion. The central bank has fixed five per cent interest rate on all loans that BFIs acquire from NRB, including the refinancing facility.
Meanwhile, NRB has also directed class ‘A’ ‘B’ and ‘C’ financial institutions to maintain the cash reserve ratio (CRR) — the portion of cash deposits that banks are required to park in the central bank vault — at three per cent.