Nepal Rastra Bank Relaxes Working Capital Loan Guidelines for Businesses

Nepal Rastra Bank (NRB) has introduced changes to its Working Capital Loan Guideline in response to requests from the business sector. The central bank announced amendments to the Working Capital Loan Guideline, 2079, aiming to make financing more flexible for businesses and financial institutions.

Under the updated policy, banks and financial institutions will now have the authority to determine the repayment period for permanent working capital loans. Previously, such loans were required to have a fixed repayment term ranging between three and ten years. With the new provision, banks can decide the appropriate loan duration after evaluating the nature of the business, its sector, and the borrower’s cash flow situation.

NRB has also relaxed the rules related to cash credit loans. Earlier, borrowers were required to keep their outstanding balance below 10 percent of the approved credit limit. The revised guideline now allows outstanding balances of up to 30 percent, providing borrowers with greater flexibility in managing working capital.

The central bank has also allowed existing permanent working capital loans to be rescheduled once until the end of Ashad 2083. The decision will be based on the borrower’s cash flow and business needs. Loans rescheduled under this provision will not automatically be downgraded to a non-performing category, and banks will not need to maintain additional loan loss provisions.

In addition, NRB has introduced special provisions for businesses that have been displaced due to infrastructure expansion projects, including the Hetauda East–West Highway and the Mid-Hill Highway. Businesses affected by these projects may request banks to restructure or reschedule their loans.

For such cases, banks can approve restructuring if borrowers pay at least 10 percent of the interest due, after evaluating their financial condition and cash flow. This facility must also be utilized by the end of Ashad 2083.

The revised policy also states that when loans of businesses displaced by highway projects are restructured, banks will not be required to downgrade the loan category or make additional provisioning. The move is expected to provide relief to businesses facing operational challenges due to infrastructure development and economic pressures.