Nepal Rastra Bank on Sunday announced a number of relief measures, including rescheduling of loan repayments deadline, for businesses affected by the Covid-19 pandemic.

Due to the pandemic, the tourism sector, including hotels, restaurants and airlines, has been hit worst while other businesses have also been affected due to ongoing lockdown and slumped economic activities in the market.

Borrowers who were supposed to pay loan installments to banks and financial institutions in mid-April can now pay the installment by mid-July. Banks cannot impose penal interest or downgrade any loans for delays in repayment, according to the central bank.

If the borrower pays the amount as per the set deadline in mid-April, the concerned bank or financial institution will need to provide a 10 percent exemption in interest, according to a directive issued by the central bank on Sunday.

“These facilities are applicable to borrowers from all sectors,” said Gunakar Bhatta, spokesperson of the central bank.

Banks and financial institutions can also extend the repayment deadline of short-term working capital, which needs to be repaid by mid-April, by 60 more days.

“If borrowers from the tourism and transport sectors who have been making regular payments seek short-term working capital, the concerned bank or financial institution will have to provide credit up to a certain limit within five days from the date of receiving the application,” the directive states. But in order to approve such loans, banks will not be able to charge fees exceeding 0.25 percent of the loan amount.

The central bank will also prioritise refinance facilities for small-and medium-scale industries.

If anyone is unable to go abroad for employment and wants to start a business in the country, the concerned bank or financial institutions will have to approve the loans or them within seven days, according to the central bank. Due to the Covid-19 pandemic, the government has discontinued labour permits for Nepalis to go abroad for work.

If any private enterprise wants to expand health facilities that will contribute to efforts in combating Covid-19, loans provided to such facilities will be counted as a deprived sector loan, states the directive. Banks are required to provide at least five percent of their loans to the deprived sector, which is basically micro-credit to the poor.

The central bank has also reduced the cash reserve ratio to be maintained by banks and financial institutions to three percent of their total deposit, down from the existing four percent.

“This will pump additional liquidity of Rs35 billion into the banking system which will help banks have adequate means when loan demands increase after the current crisis is over,” said Bhatta.