NC suggests NRB to support for business revival

Kathmandu, Jun 30

The Nepali Congress (NC) on Tuesday suggested the Nepal Rastra Bank to extend the business loan repayment period by one to three years to support the enterprises severely affected by the COVID-19 pandemic to help them in maintaining the liquidity and come out of the crisis.

A special committee of the party on sustainable projects on Investment, Infrastructure and Employment had recommended the central bank to support the pandemic affected business through interest capitalisation and loan repayment extension through the Monetary Policy for the next fiscal year 2020/21.

It has suggested to provide loan to all Small and Medium Enterprises under the priority sector lending programme to expedite the employment and entrepreneurship development. “Collateral-based loan of up to Rs. 2 million should be provided to returnee migrant workers and youth who lost their job in the internal market,” it said. “Banks and financial institutions should spend their budget of Corporate Social Responsibility (CSR) in developing skills, business plan, training to potential entrepreneurs and incubation of the start-ups.”

Coordinator of the committee Binod Chaudhary said that continuity of entrepreneurship, employment and supply chain was the demand of the time during the COVID-19 pandemic.

“The monetary policy should promote the creation of micro, cottage and small entrepreneurs with a special focus on youth and women entrepreneurship. In this context, the BFIs should channelise their CSR money to create new entrepreneurship and help the existing ones to scale up their business,” he said.

The main opposition party has urged to increase the private sector lending by 20 per cent, provide working capital up to 20 per cent to the businesses facing liquidity crisis and exhibit flexibility in interest capitalisation of loan and rescheduling the repayment.

It has drawn attention of the central bank towards the possible pressure on the financial sector and recommended to move ahead with the third-phase of financial sector reform programme and promote fintech and modern digital payment solutions, and increase financial inclusion. It will help in financial stability and strengthening of financial inclusion, said the NC.

Similarly, saying that the tourism and hospital sector businesses like hotel, airlines and travel and tours were badly affected by the coronavirus pandemic and need ventilation for the next one and a half years, it suggested to show maximum flexibility to the refinancing and rescheduling of loan mobilised in these sectors.  

The NC also recommended providing  Rs. 50 billion SME concessional loan to the enterprises that can be rehabilitated the earliest and can significantly contribute to the production, employment and supply chain.

“Likewise, the Rs. 100 billion refinancing fund should also be provided to the businesses with the potential of early recovery. Rs. 500 million loan to be mobilised at the approval of the central bank should be made clearer and transparent,” it said. It also asked the NRB to increase the size of the refinancing fund to Rs. 200 billion and per loan size to Rs. 200 million from the current Rs. 100 million.

It urged the financial sector regulator to create an environment to fully utilise the refinancing and concessional loan.

Similarly, the NC recommended to be flexible on Core Capital to Deposit (CCD) ratio, create more liquidity in the system with the provision of long term repo and simplify the credit process by shortening the complex documentation.

Published in The Rising Nepal daily on 1 July 2020.