To revive sick industries, financial
institutions might be able to obtain refinancing facility from the
central bank at a minimal interest rate.
Financial institutions can finance restoration of identified sick industries that have the possibility of revival by restructuring the already floated loans at an interest rate as less as 4.5 per cent.
Those banks that are financing sick industries can avail refinancing facility provided by Nepal Rastra Bank (NRB) at 1.5 per cent, thus banks can finance those ailing industries with a spread rate of three per cent, according to the recently released draft proposal of NRB regarding the financing of sick industries.
However, the sick industries have to submit a proper plan to revive their enterprises to the banks. Moreover, even if the banks are not qualified or interested to get refinancing facility from the central bank, they can still finance the revival of sick industries at an interest rate corresponding to their base rate.
Likewise, if the proposal for the bylaw gets endorsed, banks will have to recover the interest and principal after a certain period of time and will have to forgo penalty interest rate.
As an incentive for banks, Nepal Rastra Bank has also proposed to allow banks to provision only one per cent against possible loan loss if the sick industries pay the interest and principal amount of restructured loans regularly for a minimum of two years.
Those enterprises that are beyond saving will be provided a year by the banks to get their assets sold and not auction them off.
The Sick Industry Rehabilitation Forum at the Federation of Nepalese Chambers of Commerce and Industry states there are around 400 sick companies.
Till date, there are 37 applications at the Industrial Promotion Division for sick industry facility and the committee under the division has officially labelled Birat Leather, Birat Shoe, Nepal Boards, Everest Floriculture and Basuling Sugar Mills as sick industries.
Enterprises that have been continuously bearing losses for three years but can start to make profits if operated with facilities from the government as sick can be revived.
Source: THT
Financial institutions can finance restoration of identified sick industries that have the possibility of revival by restructuring the already floated loans at an interest rate as less as 4.5 per cent.
Those banks that are financing sick industries can avail refinancing facility provided by Nepal Rastra Bank (NRB) at 1.5 per cent, thus banks can finance those ailing industries with a spread rate of three per cent, according to the recently released draft proposal of NRB regarding the financing of sick industries.
However, the sick industries have to submit a proper plan to revive their enterprises to the banks. Moreover, even if the banks are not qualified or interested to get refinancing facility from the central bank, they can still finance the revival of sick industries at an interest rate corresponding to their base rate.
Likewise, if the proposal for the bylaw gets endorsed, banks will have to recover the interest and principal after a certain period of time and will have to forgo penalty interest rate.
As an incentive for banks, Nepal Rastra Bank has also proposed to allow banks to provision only one per cent against possible loan loss if the sick industries pay the interest and principal amount of restructured loans regularly for a minimum of two years.
Those enterprises that are beyond saving will be provided a year by the banks to get their assets sold and not auction them off.
The Sick Industry Rehabilitation Forum at the Federation of Nepalese Chambers of Commerce and Industry states there are around 400 sick companies.
Till date, there are 37 applications at the Industrial Promotion Division for sick industry facility and the committee under the division has officially labelled Birat Leather, Birat Shoe, Nepal Boards, Everest Floriculture and Basuling Sugar Mills as sick industries.
Enterprises that have been continuously bearing losses for three years but can start to make profits if operated with facilities from the government as sick can be revived.
Source: THT
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