NRB Eases Loan Loss Provisioning Rules for Crisis-Hit Borrowers

To support businesses and households affected by the Gen Z Movement and other economic disruptions, the Nepal Rastra Bank (NRB) has relaxed loan loss provisioning requirements for banks and financial institutions. Under the new directive, loans that are restructured or rescheduled by Poush 2082 will remain in the same loan classification category as of Asar 2082. This means banks will not be required to downgrade these loans, thereby easing pressure on borrowers as well as lenders.

The move provides immediate relief for crisis-hit industries, traders, and service providers, who otherwise would face stricter classifications such as substandard or doubtful loans. By keeping the same classification, borrowers gain time to recover without facing additional financial penalties, while banks avoid the need to increase provisioning that could weaken their capital adequacy.

The NRB has further allowed businesses to apply for restructuring until Poush 2082, ensuring that affected borrowers have sufficient time to negotiate revised terms. This policy is part of a broader package that includes concessional interest loans, relaxed loan-to-value ratios for transport replacement, and salary support loans with government-backed interest subsidies.

By easing provisioning rules, NRB aims to protect financial stability while supporting economic recovery, balancing the needs of distressed borrowers with the resilience of the banking system.