Kathmandu. Kathmandu: The government has issued the Working Procedure on Grants for Concessional Loans, 2082 BS.
The Ministry of Finance has issued the procedure. According to the Ministry, this procedure has been brought as it is desirable to provide subsidy amount on interest, insurance fee or security fee on concessional loans provided for the development of entrepreneurship and construction of private houses for the victims of natural disasters by modernizing and promoting traditional skills and professions.
Under this procedure, the project or business receiving the loan will have to be insured by the concerned loan as per the prevailing law. Rs. According to the procedure, 50 percent of the insurance fees required for insuring loans up to Rs 1.5 million will be paid by the concerned borrower and the remaining 50 percent fee will be collected from the grant inquiry account in the Nepal Rastra Bank to the concerned insurance company through the Nepal Insurance Authority.
Similarly, according to the procedure, the borrower will have to bear the insurance charges in case of loans above Rs 1.5 million. The insurance company will have to apply in the format prescribed by the Insurance Authority on a monthly basis along with the details for the grant of the amount of insurance related to the concessional loan. The NRA will have to conduct necessary investigation into the application received in this way and seek admission to the Rastra Bank on a quarterly basis.
Types and limits of concessional loans offered by banks
- Agriculture and livestock loans up to Rs 5 crore,
- Women entrepreneurial loans up to Rs 2.5 million,
- Youths returning from foreign employment up to Rs 2 million self-employment loan,
- Educated youth project loan up to Rs 20 lakh,
- Dalit community Bhagat Sarbajit enterprise development loan up to Rs 20 lakh,
- Up to Rs 25 lakh for startup enterprise loans,
- For boiler replacement loans in the industry up to a maximum of Rs 50 lakh,
- Private housing loan of natural disaster victims up to Rs 5 lakh.
According to the procedure, the concessional loan will be periodic in nature to be paid in installments. Provision has been made in the procedure that the limit of concessional loans once approved cannot be increased again.
There is a clear provision in the procedure that concessional loans cannot be given to more than one member of a household. Such loans will be extended only till mid-June 2018.
The government will provide interest subvention on concessional loans for a maximum of five years. Banks and financial institutions have to maintain interest rates not exceeding 1.5 per cent in the base rate. Banks will not be able to charge any additional fee other than interest on loans, loan information fee and insurance fees to be borne by the borrower at the base rate.
According to the procedure, 3 percent of the interest rate on concessional loans provided by banks and financial institutions will be provided as grant from the government. The government has reduced the interest subsidy. Earlier, the interest subsidy was 5 percent.
