Kathmandu- The business community has welcomed Nepal Rastra Bank’s (NRB) recent revision of the working capital loan directive.

 Borrowers who had taken loans exceeding the set limit have been granted an extended repayment period of two years, bringing them much-needed relief.

The original guideline, introduced by former Governor Maha Prasad Adhikari in 2079 BS, had faced persistent calls for revision from business groups. 

Although NRB later raised the loan cap for productive industries, discontent among entrepreneurs persisted.

Following the appointment of Governor Bishwo Nath Poudel, NRB moved swiftly—revising the directive even before announcing the new monetary policy—and extended the repayment period. 

The move is seen as more favourable to borrowers than to banks and financial institutions.

Under the 2079 guideline, borrowers were required to repay excess loans in phases: 10% by Ashadh 2080, another 10% by Poush 2080, 20% by Ashadh 2081, another 20% by Poush 2081, and the remaining 30% by Ashadh 2082. 

But as the end of 2082 approached, many borrowers had yet to make repayments.

In response, Governor Poudel extended the repayment deadline to Ashadh 2084. 

Banks have now been authorised to collect dues in equal instalments within this period based on a mutually agreed schedule.

NRB has made it clear that unless provisions for such loans are made regular, right-back (reversal) of loan-loss provisions will not be allowed. The revised directive also clarifies that such adjustments will not be considered as loan rescheduling or restructuring for classification and provisioning purposes.

According to NRB Spokesperson Kiran Pandit, the decision offers relief to both banks and borrowers. 

He informed that the previous guideline had introduced a 'variance' threshold for working capital loans, requiring any excess to be recovered according to a schedule. 

That variance requirement has now been removed, and banks can recover dues via equal instalments until Ashadh 2084.

'The recovery period for loans exceeding the variance limit has been extended by two years, and borrowers can now repay the amount in equal instalments. This benefits both banks and borrowers,' Pandit said.

NRB had originally introduced the directive to curb misuse of credit. Working capital loans—under headings such as cash credit, overdraft, and import financing—were increasingly being diverted to real estate and the stock market. This led NRB to tighten controls, prompting banks to stop issuing overdraft loans.

The directive had also limited working capital borrowing to 20–40% of a business’s projected annual turnover. 

Loans were classified into short-term (1 year) and long-term (up to 5 years). For long-term loans, at least three years of audited financial statements were required.

NRB had also introduced a formula for determining loan eligibility: projected annual turnover × (1 – 0.5 × variance). 

Borrowers exceeding this calculated limit were required to repay the excess by the end of the fiscal year. However, by the deadline, banks had recovered less than 30% of such loans. 

The new arrangement extends the repayment period for excess loans until Ashadh 2084.

Thanks to NRB’s facilitation, borrowers are now optimistic they can expand their businesses and repay excess loans within two years. Previously, concerns about shrinking economic activity and tighter credit had left many worried.

Business owners have expressed satisfaction with both NRB and Governor Poudel for granting this two-year window. 

The current fiscal year’s budget had already proposed revising the guideline to improve credit flow, a measure Governor Poudel has proactively implemented.

In a related move, NRB has allowed the restructuring/rescheduling of loans up to Rs 20 million in designated sectors. The deadline for meeting the priority sector lending requirement has also been extended until 2085.

Governor Poudel’s first major policy decision has sent a positive message, and business leaders are hopeful the upcoming monetary policy will be similarly business-friendly. While NRB had previously maintained a tight stance, stakeholders view this latest step as a breakthrough.

Since taking office, Governor Poudel has stressed the need for NRB to prioritise supervision over regulation. 

He has consistently said that policies should be measured by how they function in the real market—not just by their existence on paper.

 His approach suggests he is focused not just on making rules, but on ensuring they work in practice.