KATHMANDU, Feb 25: Nepal Rastra Bank (NRB) has introduced greater flexibility in working capital loans, allowing banks and financial institutions to determine the maturity period of permanent working capital loans based on borrowers’ financial conditions.
Unveiling the mid-term review of the Monetary Policy for the Fiscal Year 2025/26 on Tuesday, the central bank announced the revised provision amid persistent demands from the private sector to ease restrictions on working capital loans.
Revised interest rate corridor system introduced
Until now, NRB used to fix the repayment period for permanent working capital loans between three and 10 years. Under the new provision, banks and financial institutions can determine the tenure of such loans after assessing the borrower’s cash flow and financial statements.
The central bank has also relaxed provisions related to general working capital loans. Previously, borrowers were required to keep the outstanding amount of such loans below 10 percent of the sanctioned limit for at least seven days in a year. The threshold has now been raised to 30 percent, providing additional relief to borrowers.
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