Relief for businesses as NRB extends working capital loan deadline

KATHMANDU: Nepal Rastra Bank (NRB) has amended its working capital loan guidelines, offering significant relief to businesses by extending the implementation deadline by one year.

Under the existing rules, businesses can avail of 25% of their annual turnover as working capital loans. Borrowers with loans exceeding this threshold were required to adjust their credit exposure within the limit by mid-July 2025, as per the Working Capital Loan Guidelines, 2022. With the fresh amendment, this deadline has now been extended by a year to mid-July 2026.

Now, banks will have to recover outstanding working capital loans by restructuring them into instalments with equal repayment periods, ensuring full payment by mid-July 2027.

Had the deadline not been extended, banks would have been forced to treat the excess portion of working capital loans as 100% loss by mid-July. This would have further increased their non-performing loan (NPL) levels while also depleting their capital reserves.

Businesspeople had long been demanding some relaxation in the working capital loan guidelines. Minister for Finance Bishnu Prasad Paudel had recently advised Governor Dr Biswo Nath Poudel to relax the provision.

Poudel assumed office at the central bank on May 20.

The central bank had issued working capital guidelines under pressure from the International Monetary Fund (IMF) in October 2022. The business community had criticized the policy outright, terming it too rigid.