August 24, 2022 | Investopaper
Nepal Rastra Bank has tightened the working capital loans flowing through banks and financial institutions.
The central bank has issued guidelines to tighten such loans with effect from Karthik 1, 2079 BS. According to the new provision, working capital loans up to a total of two crores only will be provided to firms, institutions or companies from one or more banks and financial institutions.
Similarly, the total working capital loan limit has to be maximum of 20 percent of the estimated annual turnover. The term of such loan should be one year or less and such loan limit shall be renewable.
Banks provide short-term working capital loans for business operations. Borrowers take working capital loans to maintain stock in the business, make advance payments to suppliers, and manage outstanding balances. Such loans are given for operating expenses and purchasing and storing raw materials.