Kathmandu. 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. The central bank has made this provision in the unified guidelines issued to banks and financial institutions.

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.

According to the unified guidelines, there is a provision that the loan loss system cannot be ‘right-backed’ if restructured. They will also have to take proof submitted to the concerned body for permission for the development and construction of the building. 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. 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.