Loan Restructuring for Gen Z Movement-Affected Businesses

The Gen Z Movement in Nepal created unprecedented socio-economic disruptions, directly impacting industries, trade, businesses, and workers. To mitigate these shocks, Nepal Rastra Bank (NRB) has introduced a special policy allowing loan restructuring and rescheduling for affected borrowers. Licensed financial institutions are authorized to restructure loans once they verify the extent of damage and loss faced by borrowers. Importantly, borrowers must apply and finalize restructuring by the end of Poush 2082, ensuring timely support.

Under this policy, loans restructured due to the movement will retain their classification as of Asar 2082, and financial institutions must maintain loan loss provisioning at the same level. Borrowers are required to pay a minimum portion of interest dues before restructuring. Furthermore, new loans extended to revive affected businesses will be provided at base rate + 0.5% premium, making credit more affordable during recovery.

NRB has also provided relief on compliance ratios. If new financing pushes the debt-to-equity ratio beyond the usual 80:20 limit, such loans would normally be classified under “watchlist,” but for one year, this requirement is waived. Similarly, for businesses replacing vehicles damaged during the protests, the loan-to-value (LTV) ratio is relaxed from 60% to 80%, helping transport-dependent enterprises resume operations.

In addition, salary support loans are available for employers ensuring job continuity for affected workers. These loans come at base rate + 0.5% premium, with the Government of Nepal offering a 2% interest subsidy for six months. Employers must apply by the end of Poush 2082. For export-driven industries employing at least 100 women, maintaining 20% value addition, and exporting 20% of production, loans can be extended at base rate + 1% premium, supporting gender-inclusive and export-oriented growth.

NRB has further included provisions for businesses affected by border disruptions at Rasuwagadhi and Tatopani customs points, allowing similar restructuring measures.