The National Bank has expanded the scope of the designated sectors in which banks and financial institutions must extend credit. Earlier, the designated sectors included only agriculture, energy, and micro, household, small and medium enterprises/businesses. Tourism, information and communication technology-based industries, and export industries based on domestic raw materials have also been added to it. 

The National Bank had announced to broaden the scope of designated sector loans through the semi-annual review of monetary policy. Now, the same arrangement has been implemented. However, in the case of development banks and finance companies, the tourism sector was also included in the designated sector loans. Now, along with tourism, information technology and export industries have been added for commercial banks, and information technology and export industries for development banks and finance companies. 

The National Bank has also become somewhat flexible in the arrangement for disbursing loans in designated sectors. Earlier, a minimum limit was set for how much credit should be disbursed in each year in agriculture, energy, and micro loans under the designated sectors. Such loans used to be 31 percent of the total loans. Now it has been reduced to 30 percent and the scope has also been expanded.

According to this, commercial banks were required to disburse a minimum of 11 percent of their total loans to agriculture by mid-Asad 2082, 12 percent by Asad 2083, 13 percent by Asad 2084, and 15 percent by Asad 2084. The National Bank has revised this provision. According to the new provision, commercial banks will now have to disburse a minimum of 10 percent of their total loans to agriculture from mid-Poush 2083. From the same period, they will have to expand their total loans to tourism, micro, household, small and medium enterprises/businesses, energy, information technology, and export industries based on indigenous raw technology by a minimum of 20 percent.

Earlier, there was a provision that by Asad 2085, they had to disburse a minimum of 10 percent of their total loans to energy and 15 percent of their total loans to micro, household, small and medium enterprises/businesses. According to the new provision, banks will have to disburse a minimum of 10 percent of their total loans to the agricultural sector. They will have to disburse a minimum of 20 percent of their total loans to all the other sectors mentioned. No bank has disbursed more than 15 percent of its loans to agriculture. Only 15 percent of the minimum 20 percent of loans to be disbursed to the remaining designated sectors has been invested. In such a situation, the 5 percent of loans in agriculture that are more than the minimum can be calculated in the remaining designated sectors and brought to 20 percent.

However, only 8 percent of the minimum 10 percent of loans to be disbursed to agriculture is required, and 22 percent of the remaining 20 percent of loans to be disbursed to the remaining sectors. In such a situation, the excess 2 percent of loans cannot be added to agriculture to make 10 percent. Ramu Poudel, Head of the Regulatory Department of the Nepal Rastra Bank, said that such an arrangement has been made so that every bank disburses at least 10 percent of loans to agriculture.

‘The objective of the National Bank is to ensure that the specified loans are disbursed to agriculture. And, along with energy, small enterprises, tourism, information technology, and export-oriented industries are also to be expanded,’ Poudel said, ‘From 2083 Pus, banks and financial institutions that do not disburse the minimum loans to the specified sectors will be subject to action.’

According to the new arrangement, from mid-2083 Poush, development banks will have to disburse a minimum of 20 percent of total loans and advances and finance companies will have to disburse a minimum of 15 percent of loans to designated sectors. Accordingly, development banks and finance companies will have to add up the loans disbursed to agriculture, tourism, micro, household small and medium enterprises/business sectors (loans of up to 30 million and loans of up to 50 million in the case of manufacturing industries), energy sector, information and communication technology-based industries and export industries based on domestic raw materials to reach the minimum loan amount. Earlier, there was a provision to disburse the specified minimum loan only to agriculture, micro, household and  small enterprises/business, energy and tourism sectors. 

The Rastra Bank has also asked banks and financial institutions to count outstanding loans as disbursed loans to ensure compliance with the minimum limit of the arrangement regarding loans disbursed to designated sectors. "To meet the credit investment ratio in the specified sector, banks and financial institutions that provide less credit and banks and financial institutions that provide more credit may purchase and sell loans under any heading only for the purpose of reporting loans in the specified sector in accordance with this directive by paying/taking a fee in mutual agreement," the Rastra Bank said. "The purchased loans shall be shown by the purchasing banks and financial institutions by adding them and by the selling banks or financial institutions by subtracting them."

The Rastra Bank has made arrangements for institutions purchasing such loans to purchase only up to one-third of the total specified percentage. The Rastra Bank has directed that the maximum period for such purchases and sales shall be six months or until mid-Ashad of the fiscal year of purchase. The directive also clarifies that in the sale/purchase of such loans, the credit risk and return, control of the loan, and accounting in financial and other details shall be vested in the institution selling the loan. The Rastra Bank has provided the facility to count the amount invested in agricultural bonds and energy bonds as loans in the specified sector.

Banks and financial institutions have been granted the facility to count the investments made by banks and financial institutions in bonds and debentures issued by public limited companies related to the agriculture sector and public corporations and public limited companies related to the energy sector as loans in the specified sector. 

The directive clarifies that manufacturing industry means an industry that uses or processes raw materials, auxiliary raw materials or semi-processed raw materials to produce goods as defined in the Industrial Business Act 2076. Information and communication technology-based industries include software development, data processing, digital mapping, business process outsourcing (BPO), knowledge process outsourcing (KPO), data centers, data mining, cloud computing and Internet service providers (ISP). The directive states that an export industry based on domestic raw materials should be understood as an industry based on domestic raw materials that exports at least 40 percent of its production.