May 18: The Nepal Rastra Bank (NRB) has issued a circular to banks and financial institutions outlining new arrangements for loan restructuring and rescheduling. 

These arrangements were implemented as part of the third quarterly review of the current fiscal year's monetary policy (2079/80). 
As per the circular, effective from June 15, loans obtained in the hotel and restaurant, livestock, construction sectors, as well as loans up to Rs 50 million in other sectors, can be restructured and rescheduled.

The circular specifies that loan re-scheduling and restructuring can proceed once the debtor has repaid at least 10 percent of the outstanding interest amount. 

This decision is based on an analysis of the industry's and business's cash flow and income, as requested by the debtors. Additionally, the circular outlines four conditions that must be met for the implementation of these arrangements.

The circular emphasizes that only loans classified as active loans up until April 13 can be considered for restructuring and rescheduling. 

Furthermore, a provision of five percent credit loss on the restructured and rescheduled loans must be made, and these loans can only be utilized within the cluster where they were originally classified.

It may be noted that the NRB had softened some monetary arrangements through quarterly review of the monetary policy.