Nepalis can now legally acquire zero-interest loans of up to US$ 200,000
(about Rs 17.29 million) from individuals, relatives, organizations and
institutions based abroad.
Nepal Rastra Bank (NRB), the central monetary authority, on Wednesday introduced the provision in line with commitment made through the Monetary Policy introduced in mid-July 2012, ending the ban put on Nepalese individuals from acquiring credit from a foreign country.
“The provision was introduced to facilitate individuals who want to start or expand their businesses with money borrowed from those based in foreign countries,” NRB Executive Director Lila Prakash Sitaula told Republica.
In order to acquire loans from abroad, individuals first have to obtain permission from the central bank.
“For this, borrowers will have to submit loan utilization plan and provide information on type of business they are currently doing or are planning to set up. They will also have to establish their loan repayment capability,” NRB said.
Along with these, borrowers will also have to show that no interest is levied on the credit that they are getting.
However, the central bank has acknowledged that it may not be easy for it to ascertain conditions on which individuals have obtained loans from abroad. “To prevent exploitation of this loophole, we have decided to allow borrowers to remit only the principal amount once the loan tenure expires,” a high-ranking NRB official said.
NRB has said repayment period of such loans should be at least five years and the credit should enter the country through a formal channel.
Source: myrepublica (Jan 31st,2013)
Nepal Rastra Bank (NRB), the central monetary authority, on Wednesday introduced the provision in line with commitment made through the Monetary Policy introduced in mid-July 2012, ending the ban put on Nepalese individuals from acquiring credit from a foreign country.
“The provision was introduced to facilitate individuals who want to start or expand their businesses with money borrowed from those based in foreign countries,” NRB Executive Director Lila Prakash Sitaula told Republica.
In order to acquire loans from abroad, individuals first have to obtain permission from the central bank.
“For this, borrowers will have to submit loan utilization plan and provide information on type of business they are currently doing or are planning to set up. They will also have to establish their loan repayment capability,” NRB said.
Along with these, borrowers will also have to show that no interest is levied on the credit that they are getting.
However, the central bank has acknowledged that it may not be easy for it to ascertain conditions on which individuals have obtained loans from abroad. “To prevent exploitation of this loophole, we have decided to allow borrowers to remit only the principal amount once the loan tenure expires,” a high-ranking NRB official said.
NRB has said repayment period of such loans should be at least five years and the credit should enter the country through a formal channel.
Source: myrepublica (Jan 31st,2013)
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