Kathmandu: The Nepal Rastra Bank (NRB) has issued a circular to banks and financial institutions regarding the arrangements for loan restructuring and rescheduling. The circular was issued on Wednesday, May 17, 2023.

The circular states that loans mobilized in the hotel and restaurant, livestock, and construction sectors, as well as loans up to Rs 50 million mobilized in other sectors, can be restructured and rescheduled as of June 15, 2023.

"The NRB's decision to allow loan restructuring and rescheduling is a positive step that will benefit borrowers and businesses. The move is expected to help to ease the financial burden on borrowers and help businesses to recover from the COVID-19 pandemic," said an analyst.

To avail of the restructuring and rescheduling facility, borrowers must make at least a 10% repayment of the outstanding interest amount. The restructuring and rescheduling will be carried out after analyzing the cash flow and income of the industry or business.

The circular also states that the loan must have been classified as an active loan as of April 13, 2023. In addition, a 5% credit loss provision must be made on the restructured and rescheduled loan. The loan can only be mobilized in the cluster in which it was classified.

The NRB had softened some monetary arrangements through the quarterly review of the monetary policy. The latest circular is seen as a further step by the central bank to ease the financial burden on borrowers and help businesses recover from the COVID-19 pandemic.

"The restructuring and rescheduling of loans will help borrowers to repay their loans in a more manageable manner. This will also help businesses to recover from the pandemic and contribute to economic growth," said a spokesperson for the NRB.

The restructuring and rescheduling of loans will benefit borrowers in the following ways:

It will provide them with a longer repayment period, which will make it easier for them to repay their loans.
It will reduce the monthly loan installment amount, which will ease the financial burden on borrowers.
It will help borrowers to improve their cash flow and income.
It will help businesses to recover from the pandemic and contribute to economic growth.
The NRB's decision to allow loan restructuring and rescheduling is a positive step that will benefit borrowers and businesses. The move is expected to help to ease the financial burden on borrowers and help businesses to recover from the COVID-19 pandemic.

Borrowers who are struggling to repay their loans should contact their banks or financial institutions to inquire about the restructuring and rescheduling facility.