The limit of interest subsidy on subsidized loans operated with the aim of increasing production, creating employment and developing entrepreneurship is about to be reduced. Currently, under this program, the government is subsidizing 6 percent interest to women borrowers and 5 percent interest to male borrowers. Sources said that now the limit is about to be reduced by half.

According to the instructions of the Ministry of Finance, Nepal Rastra Bank is revising the integrated procedure related to interest subsidy for subsidized loans. Sources say that the Ministry of Finance is urging the Rashtra Bank to submit the draft of the revised procedure quickly. The procedure will be implemented after approval by the Council of Ministers. 

'At present, women are getting 6 percent and the rest of the borrowers are getting 5 percent interest subsidy. This limit has to be reduced. Although the final decision has yet to be made, the source said, "During the amendment of the procedure, it is now being discussed whether to reduce it to 3 percent for women and 2 percent for the rest, or 4 percent for women and 3 percent for all the remaining borrowers." 

Sources said that the current interest subsidy limit is high as loan interest rates have fallen to single digits. "Banks have started giving loans at 6/7 percent, even if the government subsidizes that interest, the interest payable by borrowers will be almost zero," the source said, "Thus, through the revision of procedures, the interest subsidized loans are going to be used and result-oriented in the productive sector."

accepted. Finance Secretary Ram Prasad Ghimire said that they are urging the Rashtra Bank to amend the procedure and submit it quickly. 

"In the current context of declining interest rates and the question of utilization of subsidized loans, the National Bank has also been instructed to suggest some changes in the interest subsidy procedure," Finance Secretary Ghimire said. tell the

. "Now the Ministry of Finance is not thinking of stopping any liability, all arrears even in interest subsidy will be paid immediately," he added, "Rashtra Bank, banks and financial institutions, borrowers and other stakeholders should ensure that the loan will be utilized properly." Even in such loans which are being flowed before, the full interest (including subsidy) has been collected from the debtor. But Finance Secretary Ghimire says that the procedure will be revised and the concessional loans will be resumed. 

According to the existing procedures, the government has been subsidizing 10 types of loans under this program. Sources have said that they are going to review the type of loan through the amendment.

In some of the 10 types of loans, loans have been given to less than 100 borrowers, and the usefulness of those loans has also been questioned. Now, there has been a detailed discussion on whether to continue those loans or to reduce them and make them time-relevant,' said the source. 

Agricultural loans up to Rs 5 crore are currently available under the subsidized interest program. The National Bank is going to reduce this limit as well. "Except for the exception, only a limited number of farmers need a large loan, most of the farmers will take a small loan, so the maximum limit of the current agricultural loan is going to be reduced," the source said. 

Recently, the procedure has not been modified since 2077. Compared to that time, the interest rate is now much lower, a study conducted by the National Bank through an independent examiner has shown that about 18 percent of subsidized loans have been misused.

'According to the latest revision, the interest rate was high in 2077, at that time, 6% interest subsidy was given to women entrepreneurs and 5% interest subsidy to the remaining nine types of loans. Now the interest rate itself has come down to single digits (seven/eight percent). Even in such a situation, the National Bank will also suggest whether the interest subsidy is right/wrong," the source said, "There are currently 10 types of loans available under interest subsidy, how relevant are they? Every loan has a maximum limit. The National Bank will also give suggestions regarding reducing/increasing the credit title or reducing/increasing the limit. An independent assessment showed that about 18 percent of the interest subsidized loans provided by banks and financial institutions under the subsidized loan program were misused (not used in the right place).

Joshi & Bhandari Chartered Accountants, who have been assigned the responsibility of consultants to determine the effectiveness and proper use of subsidized loans under the instructions of the National Bank, have shown the evaluation report. The report states that among the loan files evaluated, 7 percent of unutilized loans, 12 percent of unknown target category, 6 percent of double-use loans and 11 percent of suspected misused loans.

Not identifying the target group, double consumption and suspicion of misuse are also misuse of credit. It has been concluded that about 18 percent of concessional loans have been misused, with 7 being misused and 11 being suspected of being misused. Rashtra Bank says that this figure includes unidentified target groups and dual-use loans.

With the aim of increasing production, creating jobs and developing entrepreneurship, the government introduced a concessional loan program of interest subsidy, but after receiving many complaints about its use, the Rastra Bank announced that the monetary policy of the financial year 2078/79 would be evaluated by an independent auditor.

According to the same arrangement, Joshi & Bhandari Chartered Accountants were appointed as consultants to determine the effectiveness and proper use of refinance, business continuity loans and subsidized loans.

consultant inspected the files of 31 thousand 674 (18.63 percent) borrowers out of 170 thousand 46 borrowers who took concessional loans during the evaluation and inspected the project site of 1 thousand 838 borrowers. The same evaluation report has shown that the mentioned number of loans have been misused. Based on the