By A Staff Reporter

Kathmandu, Oct 13 : Nepal Rastra Bank (NRB) has implemented a new arrangement for the auction of a collateral.

NRB has made an arrangement that the collateral can be auctioned only after the borrower has not paid the loan installment and interest for six months.

The central bank on Monday amended the consolidation guideline to facilitate the process of auctioning collateral in favour of the debtors. At present, some banks and financial institutions auction collateral within a month when the installment is not regular.

NRB has implemented the provision that at least six months pass before the commencement of public notice and collateral auction for the recovery of loans for a period of more than one year.
For interest capitalisation, the Board of Directors of the bank and financial institution must decide and submit the application for capitalisation to this bank within 30 days of providing the first installment of the loan.

As per the new provision, the banks and financial institutions are required to maintain a maximum limit of 50 per cent of the non-business loan and personal overdraft loan based on personal nature of term loan, home loan and hire purchase loan.

Similarly, the central bank has removed the existing provision of at least 5 per cent loan loss provision for loans that have been classified in the good category but have to be classified in the lower category by mid-July 2077 BS on the basis of the period exceeded.