May 28, 2020 | Investopaper
Banks have suggested raising the housing loan limit to Rs 30 million. Banks have asked for Rs 30 million by modifying the current provision of Rs 15 million for home loans. The Bankers’ Association made the suggestion on Monday to the committee formed to study the benefits to be provided to the debtors affected by COVID-19. The association has also suggested to increase the credit limit for small borrowers from Rs 10 million to Rs 30 million and to reduce the loan-to-deposit and capital ratio.
At present, there is a provision to calculate income even if the interest on the loan disbursed by the bank and financial institution has not been collected. However, dividends cannot be distributed from the such calculated income. Banks have also requested to amend this provision to allow dividend distribution from interest up to 90 days and to continue the current provision on interest for a period of more than that.
The banker’s association has requested to extend the loan repayment period of the projects under construction. Such projects have also been asked to extend the period for a maximum of two years on the basis of necessity and justification. For that, the association has also asked to remove the 12.5 percent provision that banks have to do now.
Banks have suggested to capitalize the interest up to three months after the lockdown period (calculating the matured interest as loan) saying that the borrower does not have the repayment capacity due to COVID-19. In such a situation, considering the impact on the business of the borrower, the association has requested the bank to make arrangements for the payment of interest and repayment.
Banks will have to issue bonds of at least 25 percent of the paid-up capital within the current fiscal year. The association has also requested to extend the period by six months due to lockdown. As per the directive of NRB, banks and financial institutions should disburse concessional loan of interest subsidy in the prescribed number by Ashad 2076. The Bankers’ Association has also suggested to make arrangements for the bank for self-disbursement of refinancing loans and to add one more year for listing of shares within the stipulated time.