Money
No requests for refinance, interest subsidy yet: NRB
Nepal Rastra Bank (NRB) has said that it is yet to receive any requests from banks and financial institutions (BFIs) for refinance and interest subsidy to businesses affected by last year’s earthquake and the Indian blockade.Prithvi Man Shrestha
Nepal Rastra Bank (NRB) has said that it is yet to receive any requests from banks and financial institutions (BFIs) for refinance and interest subsidy to businesses affected by last year’s earthquake and the Indian blockade.
Although the government has formed a rehabilitation fund under the central bank with an aim to relieve such businesses, no documents have been submitted seeking the facility, central bank officials said.
According to NRB Deputy Governor Shiva Raj Shrestha, the central bank had received a file of a borrower forwarded by a commercial bank but it did not fulfil the required condition as per the Working Procedure Rehabilitation Fund Establishment and Operation.
Most businesses suffered massive losses as traders were compelled to leave their goods in various parts of India for months during the embargo.
Businesses have also suffered due to the earthquake, while the tourism sector is yet to recover from the cancellation of planned visits of foreigners to Nepal. However, when it comes to receiving facilities provided by the government, none of the businesses have taken an initiative.
Banking officials confirmed that they have not yet received any request for refinance and interest subsidy. As per the working procedure, for the loans worth up to Rs100 million, one will get interest subsidy of four percentage point and a subsidy of two percent for loans over Rs100 million.
Refinancing facility is also proved to enterprises affected by the massive earthquake and its aftershocks. An enterprise can get refinancing facility for loans up to Rs 50 million and the facility will be 20 percent for the amount above that amount. The fund will provide refinance at just 1.5 percent while BFIs have to provide the facility loan at not more than five percent.
Bhuvan Dahal, chief executive officer of Sanima Bank, said that they have not yet received a single loan proposal for these facilities. “As provisioned in the working procedure, we issued a notice seeking applications from borrowers who want interest subsidy for losses they had to endure due to the blockade,” said Dahal. “But no requests have been made.”
The working procedure has made a provision that the BFIs have to issue notice within 15 days once the working procedure goes into implementation by giving one month time.
Nepal Bank Limited, the oldest bank of the country, has also not received any request from borrowers. “ A customer from Chitwan had inquired about the issue but no formal request was made,” said CEO Devendra Pratap Shah.
Banking officials suspect that borrowers may have been discouraged to apply for such facilities as they failed to meet the set criteria in the working procedure. The working procedure has a provision that says only enterprises whose production and transactions were less than 50 percent during the first six months of the current fiscal year against the same period last fiscal year may apply. Another condition states that the loan should have been categorised under good loan until mid-July 2015.
Meanwhile, NRB is yet to receive the seed funds from the government. “We have requested the government for it,” said NRB Deputy Governor Shrestha. BFIs have committed to provide Rs30 billion.