Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB) has issued the Guidelines on Current Capital Loan-2079 with the fourth amendment.

In exercise of the powers conferred by Section 79 of the Nepal Rastra Bank Act, 2058 BS, the Rastra Bank has issued “Guidance on Current Capital Loans, 2079 (with Fourth Amendment)” on the current capital type loans provided by the Rastra Bank of Nepal (Rastra Bank), 2058 BS.

Maintaining uniformity in the basic issues of determining the ceiling of current capital loans and monitoring of current capital loans by banks and financial institutions is not only varied from institution to institution but also the analysis of the borrower’s capacity for current capital loans is flawed and weak and it is difficult to ensure the usefulness of such loans during inspection and supervision. According to the NRB, the guidelines have been amended to make the loan approval process and loan utilization transparent and to develop a basic system to ensure the utilization of loans.

Nepal Rastra Bank (NRB) has set a current capital loan limit of up to Rs 10 million (up to Rs 30 million in case of manufacturing industries).

Similarly, the current capital loan limit has been fixed up to Rs 2 crore (up to Rs 4 crore in case of manufacturing industries). The government has fixed the limit of current capital loan of more than Rs 2 crore (more than Rs 4 crore in case of manufacturing industries).

Similarly, banks and financial institutions should provide periodic loans for permanent working capital needs. It is stated that the repayment period of such periodic loan should be determined according to its current capital loan policy. The limit referred to in sub-point (b) will not be applicable for this loan.

The periodic nature of the loan can be re-tabulated only once up to the end of Ashad 2083 on the basis of need and justification by analyzing the cash flow and financial statements of the borrower. According to the NRB, this re-tabulation is not considered as a re-tabulation for the purpose of loan classification and loan loss management.