General loan loss is only 1 percent.

Nepal Rastra Bank has introduced changes to the general loan loss provisioning requirements for loans provided by Class A, B, and C banks and financial institutions through its unified directive.

Loans for Fruit Farming

• For commercial fruit farming (e.g., mango, orange, junar, kiwi, dragon fruit, avocado, etc.) and crops like silk, jute, and cotton, the general loan loss provision has been set at 1% only.

For loans with a four-year grace period

• First year: 0.25%

• Second year: 0.50%

• Third year: 0.75%

• Fourth year: 1%

Energy and Infrastructure Projects:

• For performing loans related to energy and infrastructure projects with a grace period exceeding one year, the loan loss provision can be spread proportionally each year, with the final year requiring only 1% general loan loss provision.

• Previously, the provision for such loans was 1.10%.

Projects with Assured Production Capacity Expansion

• Loans disbursed to projects with assured production capacity expansion will also require only 1% loan loss provision.

Nationally Prioritized Projects

• For rescheduling or restructuring loans related to hydropower, cable cars, cement, starred hotels, or other infrastructure projects under national priority, a 1% loan loss provision is sufficient.

Vehicle Loans

• The loan-to-value (LTV) ratio for vehicle purchases has been set at 60% only.

• This applies to electric vehicles and other personal-use vehicles.

• Previously, financial institutions could provide up to 50% of the vehicle’s value for personal use and up to 80% for electric vehicles.

This directive from Nepal Rastra Bank aims to encourage investment in agriculture, fruit farming, energy, and infrastructure sectors. At the same time, it tightens regulations on vehicle loans to enhance risk management.