Previously, under the guideline, once in a year, all working capital loans should be paid and equal to zero, however, now the central bank has allowed to keep 10 percent of loans outstanding.
As per the notice issued by NRB, out of many accounts under working capital loans, there should by less than 10 percent outstanding loans for at least seven days in any given time of a FY under the account Cash Credit Loan Account.
For that too, NRB has given a time period. For the first year, debtors can maintain less than 30 percent of the maximum loan amount as outstanding for seven consecutive days. For the second year, debtors can maintain less than 20 percent of maximum loan amount as outstanding for seven consecutive days and for the third day, debtors can maintain less than 10 percent of maximum loan amount as outstanding for seven consecutive days
Moreover, debtors are not allowed to take another loan or renew the loan in order to pay any type of loan in the same or other financial institutions. However, the guideline will not halt issuing emergency nature of loans to the debtors if they require immediate funds for their business which could be transferred directly.
Such loans could be issued to seasonal businesses as well including purchase of chemical fertilizer and festive season businesses.
If such loans are renewed or mobilized for different purposes, they should be categorized as bad debt and a provision of possible losses of 100 percent should be maintained. If a debtor requires such a loan twice in a FY, BFIs can provide such loans after BOD approval.
