– Ram Chandra Rupakheti
1. The upper bound of the Interest Rate Corridor has been kept unchanged to 5 percent, the deposit collection rate as the lower bound of IRC has been reduced from 2 percent to 1 percent, repo rate as the policy rate has been reduced from 3.5 percent to 3 percent.
2. The total credit in the agriculture sector should be at least 15 percent of the total credit. This will be done by banks and financial institutions till 2080, Ashad end.
3. To help in those agriculture sectors for self-sufficient, 0.2% provision in the first year and 0.6% provision in the second year of operations have been made on the loan. These sectors include fruit farming like mango, sweet orange (junar), lychee, kiwi, dragon food, avocado, etc.
4. Agriculture bank will be made as leader of lenders in agriculture sectors.
5. Farmer’s credit card will be distributed to farmers by Agricultural Development Bank.
6. By the end of 2081, the loan should be disbursed at least to 10 percent of total credit in energy sectors. It is added a policy for the experience gainers in energy sectors to issue energy bonds for the long-term fund in the energy sectors.
7. There is a facility of lower interest rate to be 1 percent addition in the base rate to hydropower companies who complete the project and start exporting the electricity within 5 of operations. The interest capitalization facility has been provided to those hydropower companies which complete the project and start producing electricity remaining incomplete to transmit the electricity due to transmission lines are not built.
8. The easy loan facility has been made to COVID-19 affected business which involved in the product promotion, employment generation, and entrepreneurship development at 5 percent.
9. A personal residential home loan will be provided up to 60 percent of their mortgage valued amount.
10. The share margin lending will be provided up to 70 percent of the value measured by respective banks.
11. Development banks and financial institutions should provide 20 percent and 15 percent of their total credits to agriculture, micro and small enterprise, energy, and tourism as stipulated sectors by the end of Ashad, 2081.
12. The working capital loan limit has been enhanced by up to 20 percent on the Chaitra end, 2076.
13. The renewable facility is allowed on the working capital such as demand loan, cash credit, etc, short term in nature, which were expired on Ashad, 2077 to Paush end, 2077 after analysis of loanee’s financial position.
14. The loan installment repayment and interest payment of least affected by COVID-19 on business/ profession have been extended up to Paush, 2077. If there were a medium affected business, this facility shall be extended to Chaitra end, 2077. This shall be extended to Ashad, 2078 for the highly affected business by COVID-19.
15. One-time rescheduling/ restructuring has been provided to active good loanee up to Paush, 2077 by recovering 10% interest.
16. Capitalization of interest will be granted to those infrastructure loans which got grace period interest capitalization facility previous to this policy.
17. The grace period will be allowed one time to tourist hotel according to the affected situation from 9 months to 2 years.
18. The maturity period shall be extended to six months on those loans where installments are not recovered till Ashad, 2077 provided by microfinance institutions.
19. Big mergers shall be encouraged. After the merger, banks will get a 0.5 percent reduction facility on cash reserve ratio and 1 percent on statutory liquidity ratio till Ashad, 2079. The institutional fixed deposit limit shall be enhanced by up to 10 percent. The 5 percent per institution will be enhanced on these deposits. The cooling period will not be applicable to those individuals holding senior positions in banks before mergers. This merger policy shall be encouraged to microfinance institutions.
20. CCD ratio will be increased to 85 percent.
21. The cash dividend will be restricted to those institutions less than 5 percent of their capital.
22. Interest recovered in cash within 90 days of fiscal year 2076.77 will not need to be transferred to regulatory reserve as per the prevailing policy.
23. An additional 5 percent provision on a good loan on Paush, 2076 should be done if the installments and interest have not been recovered till Ashad, 2077.
24. The licensing process to microfinance institutions is canceled even if they are in process.
25. A collateral loan based micro-enterprise loan up to 15 lakhs can be provided.
26. The interest rate ceiling will be 15 percent on loans provided by microfinance institutions. The Base rate calculation method for interest rate determination will be introduced.
27. The Service charged is applicable up to 0.5 percent on the loan provided to microfinance institutions by A, B, C class institutions.
28. Microfinance institutions cannot keep their liquidity on fixed deposits, not more than 3 months. This shall not be applicable to other long-term funds.
29. The wholesale microfinance institution and those which collect public deposit will prepare their financial report as per NFRS for the fiscal year 2077.78.
30. A B, C, and D class institution can collect service charges up to 0.75 percent, 1 percent, 1.25 percent, and 1.50 percent respectively on loan disbursement amount.
31. The KYC form for the banks and financial institutions will be available uniformity.
32. No ATM charge will be applicable if it is issued other than ATM of the banks till the effect of CODID-19.
33. No penalty shall be collected from the loanee on the extension of the expiry date.
34. Policy for Institutional Social Responsibility fund will be revised and the remaining as on fiscal year 2076.77 fund shall be transferred to the ‘Coronavirus Infection Prevention, Control and Treatment Fund’.
(The writer is working as Chief of Finance Department with National Microfinance Bittiya Sastha Ltd.)
Disclaimer: The views expressed in the text belong solely to the author, and not to author’s employer or associated institutions.