Relief Loan : The Ministry of Finance has issued Business Continuity Credit Flow Procedure 2077. The government is preparing to open a business operation continuity loan flow account of Rs 50 billion. Its implementation will be through NRB. Remuneration will be provided to the workers and employees of domestic, small and medium enterprises and tourism business affected by COVID-19 and money will be provided for business operation continuity.
In accordance with the procedure passed by the Council of Ministers on the proposal of the Ministry of Finance, the government will provide necessary loan to the Nepal Rastra Bank for the flow of credit to continue the business by providing concessional Relief Loan. The government will open a business operation continuity credit flow research account of Rs. 50 billion in the banking office of NRB to be operated by NRB.
In which the amount provided by the Government of Nepal, the amount to be deposited from the institutions fully or partially owned by the government in coordination with the Ministry, the amount to be received as per the agreement made by the Government of Nepal with foreign associations and institutions will be deposited.
Arrangement has been made for the Ministry to deposit the amount in the same account again and again on the basis of need, and the NRB will return the amount in the account to the Government of Nepal and the concerned institution after the purpose is exhausted. The procedure stipulates that concessional loans will be provided to domestic, small and medium enterprises and tourism businesses that are affected by COVID-19 and have difficulty in running their businesses due to non-payment of Relief Loan.
Similarly, Relief Loan have been classified into three types, namely Highly Affected Area, Middle Affected Area and Low Affected Area. In which the annual wage of the workers and employees in the most affected areas and 50 percent more of it (for business continuity) is the total amount or up to a maximum of Rs. 100 million.
Similarly, in the moderately affected areas, the annual wage of workers and employees and 50 percent of it (for business continuity) has been added to the total amount or up to a maximum of Rs. 70 million. Similarly, in the least affected areas, the total amount or up to a maximum of Rs. The procedure also states that 50 percent of the loan will be disbursed to the worst affected areas, 30 percent to the moderately affected areas and 20 percent to the least affected areas.
As per the procedure, the interest rate on such Relief Loan has been fixed at 5 percent for the first year and 6 percent for the second year. Banks and financial institutions disbursing such loans will be provided funds from the accounts at an interest rate of 2 percent in the first year and 3 percent in the second year.
A maximum of five percent interest will be provided to the institution for the amount to be taken from the institution which is wholly or partially owned by the government. The payment period to be provided from such account will be maximum 2 years.
According to the working procedure, the business has been affected by COVID-19, has registered with any government body and has received a certificate and has been renewed regularly. And according to the prevailing law, provision has been made to disburse Relief Loan to those who have filed after deducting advance income tax.
In order to get a Relief Loan, the entrepreneur has to submit the audited financial statement of the last financial year and the income statement submitted to the Inland Revenue Office, tax payment or tax filing certificate of the last financial year.
The licensed institution must evaluate the application and disburse the loan within 15 days from the date of receipt of the application. If the loan is rejected, the reason should be disclosed and the applicant should be informed in writing within the same period. The concerned entrepreneurs will not be able to remove their employees from employment during the loan period.
Similarly, if the loan is not found to be utilized well, action will be taken as per Nepal Rastra Bank Act, 2058 BS. If the entrepreneur is found to have misused the loan facility obtained under this procedure, the NRB may send a letter to the Credit Information Center to deprive such entrepreneur of all types of banking facilities or to blacklist him.
In order to manage the credit flow in a systematic manner, the Board of Directors will be chaired by the Secretary of the Ministry of Finance and comprising the Comptroller General, Deputy Governor of NRB, NRB, Banks and Financial Institutions Regulation Department, Chairman of Nepal Bankers Association and Joint Secretary for Finance.
As mentioned in the budget statement of the Fiscal Year 2077/78, this procedure has been formulated and implemented to provide concessional Relief Loan for business continuity.