August 28: Nepal Rastra Bank (NRB) has increased the working capital loan limit for the productive sector.

The central bank has amended the Working Capital Loan Guidelines, 2079, allowing banks and financial institutions (BFIs) to extend loans up to Rs 30 million for the manufacturing industries.

Issuing a notice on Monday, the NRB confirmed that it amended the guidelines and instructed all stakeholders to comply with the new provisions.

Earlier, the central bank had fixed a ceiling of Rs 10 million as working capital.

The central bank had capped the limit on working capital loan to 20 percent in case of a company whose annual transaction was less than Rs 20 million. However, they could avail up to 40 percent loan under special circumstances. In case of a company whose annual transaction was over Rs 20 million, they could avail 25 percent loan. 

Nepal Rastra Bank had introduced the guidelines on October 18, 2022 to prevent the misuse of loans taken by businessmen under the heading of current capital.

Nepal Rastra Bank’s Governor Maha Prasad Adhikari had defended the central bank’s move to amend the Working Capital Loan Guidelines arguing that the new guidelines were introduced to control “over financing.”

After the industrialists protested against it, the guidelines were revised in January.

Working capital loan is provided to the firms, organizations and companies to cover their short-term operational needs.