NRB to bring relief package for borrowers

To include debt restructuring facility, deferment in credit payback period, among others

Kathmandu, October 8

Nepal Rastra Bank, the central bank, is soon introducing a relief package for borrowers whose cash flow has been affected by the ongoing protests in the Tarai and irregular supply of raw materials and other commodities from Indian border points.

“We are still working on the package. But it will definitely include debt restructuring facility, deferment in credit payback period and grace period for loan repayment,” NRB Deputy Governor Maha Prasad Adhikari told The Himalayan Times.

The package, according to Adhikari, will be finalised and introduced once NRB Governor Chiranjibi Nepal returns from Peru, where he’s attending the annual meeting of the World Bank Group and the International Monetary Fund.

NRB is under pressure from the private sector to immediately launch the package as almost all of the sectors have been hit hard by 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 the agriculture sector has been badly affected this time, with many farmers facing shortage of fertilisers and feeds for poultry,” Pashupati Murarka, president of the Federation of Nepalese Chambers of Commerce and Industry said, adding, “The cost of all the disruption stands at over Rs two billion per day, which means the economy will suffer badly this year.”

As almost all of the sectors have been affected in one way or the other, revenue sources have dried up, making entrepreneurs unable to service debt.

“We know the impact of protests and shortage of goods has been much more severe than those from earthquakes (of April and May),” said Adhikari. “That’s why we are looking at the best options to provide relief to borrowers through the relief package.”

One of the components of the package, according to Adhikari, would be deferment in loan repayment

period till mid-January.

“Banks and financial institutions will not be allowed to slap fines or take extra charges while extending the repayment period,” Adhikari said, adding, “We have already held discussions in this regard with Nepal Bankers’ Association (the umbrella body of commercial banks of the country).”

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 for projects hit by the latest developments so that instalment periods can be deferred.