By A Staff Reporter
Kathmandu, Nov 26: Nepal Rastra Bank (NRB) has directed banks and financial institutions (BFIs) to implement Business Continuity Credit Flow Procedure, 2077 BS.
The central bank has directed to provide business continuity loan by making additional arrangements in the working procedures approved by the government recently.
The NRB has implemented Business Continuity Credit Flow Procedure-2077 to rehabilitate the areas affected by COVID-19.
The NRB is facilitating the payment of wages of the workers and employees of the industries and businesses affected by the COVID-19 pandemic and providing easy loans for the continuity of business operations.
As per this procedure, a concessional loan of Rs. 50 billion will be provided to the COVID-19 affected industries and businesses.
As per the working procedure, loans will be provided to the domestic, small and medium enterprises and tourism businesses which are affected by the COVID-19 and are unable to pay the wages of the workers and employees due to lack of funds.
Provision has been made in the working procedure to provide the total amount or up to a maximum of Rs. 100 million by adding 50 per cent of the annual salary of the workers or employees as the most affected area.
Similarly, in the moderately affected areas, the annual wage of the workers and employees and 50 per cent more of it (for business continuity) is the total amount or up to a maximum of Rs. 70 million.
In the least affected areas, the annual wage of workers and employees and 50 per cent more (for business continuity) is the total amount or up to a maximum of Rs. 50 million.
NRB has said that such loan can be disbursed only up to 10 per cent of its primary capital.
According to this procedure, 50 per cent of the loan will be mobilised in the most affected, 30 per cent in the medium and 20 per cent in the least affected areas.
The interest rate on the loan is 5 per cent for the first year and 6 per cent for the second year.
It is mentioned that the loan will be provided to the BFIs at 2 per cent interest rate in the first year and 3 per cent interest rate in the second year.
A maximum of five per cent interest will be provided to such institution for the amount to be taken from the institution which is wholly or partially owned by the government.
In order to manage the flow of credit in a systematic manner, the Board of Directors under the chairmanship of secretary of the Ministry of Finance will be formed where the Comptroller and Auditor General, Deputy Governor of NRB, NRB Bank and Financial Institutions Regulation Department, Chairman of Nepal Bankers Association will be the members.