Private sector seeks extension of default period for borrowers

Kathmandu, January 12

The private sector has requested the Ministry of Finance (MoF) and Nepal Rastra Bank (NRB) for another extension of three months to repay principal and interest amount of loans that matured by the second quarter of this fiscal, citing unfavourable economic situation caused by the border blockade.

Businesspeople have said that the affected borrowers will be able to repay the loan within a year by reviving their businesses after the unfavourable situation ends and have requested the NRB to extend the facility of capitalised interest — interest added to the principal balance of a loan for a long-term asset.

During an interaction programme with Finance Minister Bishnu Prasad Paudel and Governor of NRB Chiranjibi Nepal, organised by the Federation of Nepalese Chambers of Commerce and Industries (FNCCI), businesspeople said that if NRB extends the repayment period till the third quarter, it would be supportive for the businesses to manage their cash flows.

NRB had earlier waived the penal interests that banks and financial institutions (BFIs) charge for delays in repayment of principal and interest amounts till the second quarter of this fiscal owing to the difficulties faced by businesses in the country.

“The private sector have sought similar facility for a longer period as the border blockade has prolonged,” said Shankar Pandey, chair of the banking committee of FNCCI during the interaction.

The government has launched Economic Revival Fund of Rs 100 billion and it will come into operation after NRB issues a circular — on providing interest rate subsidy and refinancing facility — to the BFIs. “It would be easier for the businesses to maintain working capital as the eligible borrowers will get refund of the first six months’ interest rate that they paid to the BFIs.”