FNCCI seeks extension to loan repayment deadlineFederation of Nepalese Chambers of Commerce and Industry (FNCCI) has asked the Nepal Rastra Bank (NRB) to extend the deadline for first quarter instalment payment until the second quarter-end
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has asked the Nepal Rastra Bank (NRB) to extend the deadline for first quarter instalment payment until the second quarter-end, stating the ongoing strikes in the Tarai have badly affected industries and businesses.
An FNCCI team led by its President Pashupati Murarka met NRB Governor Chiranjeevi Nepal on Wedneday and requested for the deadline extension for the payment of principal and interest of trust receipt loans, other short-term loans and demand loans until mid-January.
The apex private sector body also asked central bank to make a provision that banks and financial institutions concerned would not impose penal interest for the deferral of the loan repayment deadline.
The Tarai region has remained closed for the last one and half months due to the banda organised by various Madhesh-based parties and organisations. Almost all industries operating in key industrial corridors from Bara-Parsa to Sunsari-Morang have remained closed.
The shutdown of industries, transportation, trading, export-import and educational institutions has caused losses of billion of rupees, according to the FNCCI.
The prolonged banda in the country’s main industrial belt, which has come just after the devastating April 25 earthquake, is expected hit the economy hard.
During the meeting, Murarka said business enterprises have failed to pay bank loans and tax to the government.
FNCCI Senior Vice-president Bhawani Rana, Vice-presidents Dinesh Shrestha and Shekar Golchha and Banking Committee Chairman Shankar Prasad Pandey also participated at the meeting.
Governor Nepal said the central bank was observing the situation closely and was ready to help the entrepreneurs as far as possible, according to an FNCCI statement.
A few days ago, Nepal Bankers’ Association (NBA) had also written to the central bank, expressing concerns about a possible rise in defaults due to the closure
of industrial and trading activities as a result of banda and undeclared embargo imposed by India.
NBA had requested the NRB to allow them to adjust the transactions of fourth month of the fiscal year in the balance of the first quarter.
Sanima Bank CEO Bhuwan Dahal told the Post the risk of loan defaults has increased sharply.
“The defaults rate could jump this year as businesses have been affected by both the April 25 earthquake and the Tarai unrest,” he said.
A central bank study has shown around Rs38 billion in credit extended by banks and financial institutions face risk of defaults due to the damage caused by the earthquake to projects and collaterals.