NRB Extends Deadline for Repayment of Excess Working Capital Loans by Two Years

Borrowers who had taken out working capital loans beyond the regulatory limit have now been granted an additional two years for repayment. This extension was issued through a revised guideline on working capital loans by Nepal Rastra Bank (NRB) on June 17, 2025 (Ashadh 3, 2082 BS).

Previously, such loans had to be repaid by Ashadh 2082, but NRB has now extended the repayment deadline to Ashadh 2084. Borrowers had been struggling under the prior deadline and had appealed to NRB for leniency. This revision comes as a response to their requests.

Repayment Schedule and Terms

According to the updated directive, any loan exceeding the working capital limit must now be repaid in equal periodic installments by the end of Ashadh 2084. A formal repayment schedule should be developed accordingly.

However, interest provisioning already made on these loans cannot be reversed until the loans are regularized. Additionally, NRB clarified that such rescheduling will not be treated as restructuring or reclassification for provisioning purposes.

Background of the Policy

The Working Capital Loan Guidelines came into effect on Kartik 1, 2079 BS (October 18, 2022). Loans exceeding the defined threshold during the first renewal were initially expected to be repaid in a phased manner:

• 10% by Ashadh 2080
• 20% by Poush 2080
• 20% by Ashadh 2081
• 20% by Poush 2081
• 30% by Ashadh 2082

This final phase has now been extended to Ashadh 2084, allowing extra time for financial institutions and borrowers alike.

Relief for Banks and Borrowers

Industry experts believe this new policy offers much-needed relief for both borrowers and banks. Amid economic stagnation, many borrowers were struggling to repay, while banks were finding it hard to recover their loans. The extended deadline gives breathing room to both sides.

Restructuring Facility for Priority Sectors

NRB has also extended the implementation of the variance-related provision under Section 7 of the Working Capital Guidelines 2079 to Shrawan 1, 2083. It was originally scheduled to come into effect from Shrawan 1, 2082.

For borrowers in sectors such as agriculture, energy, and MSMEs (micro, small, and medium enterprises) with loans up to NPR 20 million, NRB has provided a one-time restructuring/rescheduling option based on financial viability and cash flow analysis. However, at least 10% of the payable interest must be recovered for the restructuring to be approved. This must be completed by end of Ashwin 2082.

Moreover, loans restructured this way must be classified under the same category they were in as of Poush-end 2081, and any interest loss provisioning made prior to restructuring cannot be reversed.

Extended Time for Directed Credit Flow

NRB has also extended the deadline for banks and financial institutions to meet the minimum credit flow targets to priority sectors such as agriculture, tourism, energy, and small-scale enterprises.

Commercial banks, which were required to channel at least 15% of total credit to agriculture by Ashadh 2084, now have until Ashadh 2085. Revised targets are:

• 11% by Ashadh 2082
• 12% by Ashadh 2083
• 13% by Ashadh 2084
• 15% by Ashadh 2085

The same extended timeline applies to the 15% minimum credit flow to MSMEs, including loans below NPR 20 million and direct loans to low-income groups.

Development banks and finance companies must also meet adjusted credit flow targets by Ashadh 2085. Previously, development banks were to allocate 20% and finance companies 15% of total credit to the designated sectors by Ashadh 2084.