November 22: The government has decided to collect forms for providing concessional loans to the sectors affected by coronavirus after November 25. The government has announced concessional loans of Rs 50 billion to the sectors affected by the pandemic.
The government has started preparations to release the loan nearly five months after the budget announcement upon endorsing the Business Continuity Loan Disbursement Work Procedure.
A recent meeting of the Loan Flow Operation Committee headed by finance secretary decided to start collecting the forms from November 25 for the effective disbursement of loan.
According to the finance secretary, the government is also planning to secure source of investment for the loan.
As the government has already issued a notice releasing the loan, cottage, small and medium-scale industries as well as tourism entrepreneurs affected by the pandemic can fill the forms to avail the concessional loans at commercial banks.
The work procedure has classified the loan into three different sections – most affected, medium affected and least affected.
The commercial banks will evaluate whether the loan applicants meet the criteria fixed by the government or not and will release the amount within 15 days after the application form is filled.
According to the work procedure, the interest rate for the concessional loan has been fixed at 5 percent per annum for the first year and 6 percent for the second year. The government will avail loan to the commercial banks and financial institutions for this purpose at an interest rate of 2 percent for the first year and 3 percent for the second year.
The loan has to be utilized by the entrepreneurs to pay the salary of the employees and to operate their day-to-day business.
The time for repayment of loan is a maximum of two years.
Nepal Rastra Bank was scheduled to issue a circular on Sunday (November 22) to the commercial banks to release loan to the applicants who meet the government criteria.
According to Executive Director of Nepal Rastra Bank Dev Kumar Dhakal, the central bank will release the amount to the commercial banks after proper evaluation once the banks provide the loan to the target groups.
The government will deposit a certain amount in an account of Nepal Rastra Bank while the remaining amount will be provided by government-owned or semi government organisations as well as foreign organisations with whom the government has signed agreements to avail such loan.
According to officials at the Ministry of Finance, international donor agencies like the World Bank and the Asian Development Bank have committed to avail the loan to the Government of Nepal.
The government claims that it has already confirmed source of investment for at least Rs 30 billion.