January 5, 2023 | Investopaper
Nepal Rastra Bank has revised the Working Capital Loan guidelines, 2079. The central bank has informed that this guideline, which came into effect on Karthik 1, 2079 has been amended to facilitate its implementation.
There was a lot of pressure from the private sector on the government and the central bank to revise the guidelines on working capital loans.
Spokesperson Gunakar Bhatt informed that the guidelines have been revised based on the suggestions received from various sectors. He said that there have been amendments mainly related to the management of working capital loan deadlines and loan amount limits.
The revised guidance mainly introduced new provisions such that old loans should not be re-loaned and re-scheduled, and payments could be considered as periodic loans. If a borrower’s loan prior to the implementation of this guidance has to be reconciled under different loan titles, it will not be considered as rescheduling and restructuring. For that purpose, a separate classification and ‘provisioning’ system has been implemented.
According to Nepal Rastra Bank, if a borrower is using loans in excess of the prescribed limit before the implementation of this guidance, such loans can be adjusted by maintaining them as periodic loans. The periodical loan that will be maintained after such adjustment will have to be paid in five installments and its period will start from Ashad 2080 and will last until the end of Ashad 2082.
As per the revised guidelines, the loan exceeding the specified limit can be treated as a periodic loan and paid within this time, but if a borrower wants to pay all the loan before Ashad 2082, there will be no prepayment charge.
While determining the limit of periodic loans for working capital purposes, there was a provision to take at least five years of estimated financial statements, but now it has been made three years.
Banks and financial institutions must conduct an inspection of current assets and current liabilities at least once in three months and a mandatory emergency inspection once a year and keep the report updated in the loan file.