Nepal unveils monetary policy to revive industries

Kathmandu: Nepal’s central bank has unveiled a number of measures to provide relief and revive the industries hit by the COVID-19 pandemic.

By presenting the monetary policy for the fiscal year 2020-21 that began on July 16, Nepal Rastra Bank Governor Maha Prasad Adhikari said on Friday that the repayment deadline of paying loan installments would be extended by maximum one year depending on the degree of impact on the particular sector, reports Xinhua news agency.

The worst affected industries can pay the installment by mid-July this year, till mid-July 2021.

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The industries that faced medium level impact from the pandemic can pay such installment till mid-April 2021 and those mildly affected by COVID-19 can pay the installment mid-January next year.

Tourism and hospitality and the aviation sector as well as small and medium enterprises are among the worst affected by the pandemic which has claimed 40 lives and infected over 17,000 people in Nepal so far.

The central bank presents the monetary policy every year to help the Nepal government to achieve various economic objectives through monetary measures.

Helping to revive the pandemic affected sectors is one of the major priorities of the government for the fiscal year 2020-21.

The policy has also decided to make arrangements of extending loans at cheaper interest rate to the COVID-19-affected sectors.

A relief package of 50 billion Nepali rupees ($444 million) will be used for providing cheaper loans to the badly affected, like tourism, micro, small and medium enterprise, for their revival and paying the salaries to their staff.

These sectors will get loans at maximum 5 per cent, the central bank said, adding that it will also provide separate refinancing package for the pandemic-affected businesses at not more than a 5 per cent interest rate.

The major priority of Nepali government for this fiscal year is economic revival through various relief measures for the pandemic-affected sectors, agriculture modernization and job creation.

Hence, the monetary policy has made it mandatory for the commercial banks to extend a minimum 15 per cent of total loans in the agriculture sector by mid-July 2023.

The central bank also asked the commercial banks to provide a minimum 10 per cent of total loans in the hydropower sector by mid-July 2024.

For the first time, the banks are required to extend minimum 15 per cent of total loans in micro, small and medium enterprises, according to the new monetary policy. These sectors are major job creators in Nepal.

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