Nepal Rastra Bank is preparing to introduce a second phase relief package targeting businesses and individuals impacted by the novel coronavirus.

The central bank had introduced a few measures two weeks ago aimed at offering relaxation on repayment of loans for businesses and the public hit by the coronavirus pandemic. However, as businesses are completely shut since almost one month and it is still uncertain how the coronavirus pandemic will evolve, the central bank is working on a second phase of relief package, especially targeting businesses hit by the pandemic.

Owing to the fear of coronavirus spreading and the subsequent nationwide lockdown, all businesses across the country have been shut since March 24 when the lockdown was enforced.

Though NRB had introduced a few relief measures, the private sector and experts have been saying that the measures are inadequate. They have suggested that the government bring a ‘heterogeneous’ relief package that intends to upscale the economy.

Talking to The Himalayan Times, NRB Governor Maha Prasad Adhikari said the nature of the second phase of relief package would depend on the recommendations of a study committee that NRB had formed to assess the impact of the coronavirus  on different sectors and the entire economy.

“NRB is serious about mitigating the impact of the pandemic on businesses. As a study committee is carrying out an assessment, NRB’s future steps will be based on the recommendations and findings of the committee,” said Adhikari.

However, high-level officials at the central bank revealed that the upcoming relief package from NRB would basically be inclined towards further relaxations on repayment of loans for businesses and the public.

NRB has already deferred the collection of monthly or quarterly instalments (that were to be collected by midApril) from borrowers till mid-July.

The provision is applicable to all borrowers, including credit card holders. “However, as the lockdown has been prolonged, discussions are under way to further extend the loan repayment period (to be collected by midMay),” said an NRB source seeking anonymity.
The official added that NRB would possibly bring in sector-specific relief package soon. “Though every sector has become a victim of the pandemic, a few sectors have been more severely affected while others are less affected. The relief package will be more inclined towards sectors highly affected by the coronavirus,” said the NRB official.

Likewise, NRB is also dwelling on further increasing the size of the refinancing fund. In a bid to ensure availability of loan facilities for businesses hit by the coronavirus, the central bank had recently raised the size of refinancing fund to Rs 60 billion from Rs 50 billion.

However, NRB is likely to take at least a week to introduce the second phase of relief package as the study  committee is yet to complete its assessment of the  impact of the coronavirus on several sectors.

The private sector has been suggesting that the central bank bring down the interest rate on loans by three percentage points.

The Federation of Nepalese Chambers of Commerce and Industry had recently met Governor Adhikari and suggested that he bring down interest rate to help businesses revive from the devastation caused by the coronavirus.

The private sector has also sought special loan facility from the central bank to pay wages to workers.

source: the himalayan times, 15 april 2020