Govt has announced a plan to provide interest Subsidy on loans for various programmes
Kathmandu, November 11
The Nepal Rastra Bank (NRB), the central bank, has called on banks to disburse loans at subsidised interest rates as per the provisions incorporated in its integrated working procedure made public in September.
The government through the budget of this fiscal year had announced a plan to provide interest subsidy on loans for various programmes, including youth self-employment, women entrepreneurship, and agriculture and livestock promotion.
Among these programmes, the Educated Youth Self Employment Programme, which allows youths to secure business loans on the back of academic certificates, was highly talked about. But the scheme, which paves the way for educated youths to obtain loan of up to Rs 700,000, has not been implemented till date.
The NRB’s integrated working procedure also allows returnee foreign migrant workers to secure bank loan of up to Rs one million to start a business, while students are entitled to a bank credit of up to Rs 500,000 to pursue higher education. Also, women entrepreneurs can apply for loans of up to Rs 1.5 million under the programme. But none of these schemes, under which loans must be paid back within five years, has been implemented till date.
The central bank has now called on people, who are eligible for these programmes, to apply for loans and file complaints if services are not rendered. Bankers have said they would entertain borrowers who are eligible for loans, but may not be able to cater to the demands of everyone as they are facing shortage of loanable funds.
Banks have been facing shortage of loanable funds for the last few years due to mismatch in deposit collection and credit disbursements. Banks tend to go on lending spree in the first quarter of the fiscal year when deposit stock swells. Then as funds start depleting, they drastically cut credit flow and raise lending rates, putting borrowers in a difficult position. This problem of shortage of credit coupled with hike in lending rates has repeated this year as well. This is expected to hit the government’s plan to meet eight per cent economic growth target in the current fiscal year.
The country must invest at least Rs 1,438 billion (at current price) in fixed capital assets, excluding land and equipment like private cars, in the current fiscal year to attain eight per cent economic growth target, according to the NRB. This figure, referred to as gross fixed capital formation (GFCF) in technical terms, is 40 per cent higher than in the last fiscal year and accounts for 41.6 per cent of the gross domestic product.
Of the total GFCF, Rs 432 billion should come from the government and remaining Rs 1,007 billion from the private sector, NRB says.
The post NRB’s interest subsidy scheme gathers dust appeared first on The Himalayan Times.
Written by Sandeep
This news first appeared on https://thehimalayantimes.com/business/nrbs-interest-subsidy-scheme-gathers-dust/ under the title “NRB’s interest subsidy scheme gathers dust”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.
