Kathmandu. Nepal Rastra Bank (NRB) has made provision to reschedule or restructure loans extended to firms or companies related to land development and building construction.

According to the unified guidelines issued by the central bank to banks and financial institutions, the loan should be restructured by mid-October. Such loans should be classified into at least the same category as they were classified in mid-April.

According to the unified guidelines, the restructured loan loss system cannot be ‘right-backed’. For land development and building construction permission, proof submitted to the concerned body will also have to be taken.

A new provision has also been made regarding the schedule of payment of agricultural loans. The licensed institutions can provide agricultural or commercial loans including food crops, livestock, fish rearing up to Rs 1 million after evaluating the mortgage of agricultural produce agricultural land, agricultural business structure.

The mortgage can be assessed by the employees of banks and financial institutions or other collateral assessors, while the borrower will not be allowed to charge collateral fees after making the assessment. If the farmer asks for a loan for vegetable cultivation, then if it takes four months for the farmer to produce and bring it to the market, then the installment of the loan will have to be maintained in four÷-four months.

Similarly, adequate grace period of such loan will have to be provided. According to the directive, 0.25 percent loan loss can be maintained for good loan in the first year and 0.5 percent in the second year. The institution itself will have to make regular monitoring and evaluation through internal audit of the concerned institution, giving priority to the loan disbursed after evaluating the collateral.

For the production of agricultural produce of the varieties recommended by the Nepal Agricultural Research Council (NARC), the interest rate on the loan should be fixed by adding a maximum premium of 1.5 percent. In the first year of the grace period, the loan loss provision to be maintained for good loans should be 0.25 percent and in the second year only 0.5 percent. The required grace period can be provided or interest capitalized on the loan.

According to the guidelines related to the standardization of hotels and restaurants on the basis of food hygiene by the Department of Food Technology and Quality Control, the hotels and restaurants operating in the areas along the postal highway and mid-hill highway will have to fix the interest rate of loan by adding a maximum of two percent to the base rate.