Government Expands Concessional Loan Scheme with New Categories and Revised Limits

The Government of Nepal has introduced the second amendment to the Interest Subsidy Procedure for Concessional Loans, 2082, bringing new loan categories, revised borrowing limits and additional support measures for targeted groups. The Ministry of Finance approved the amendment on Shrawan 22, 2083, following which Nepal Rastra Bank directed Class A, B, C and D banks and financial institutions to implement the revised provisions. Under the amended framework, the maximum loan limit has been set at Rs. 5 crore for agriculture and livestock, Rs. 25 lakh for women entrepreneurs, Rs. 20 lakh each for returnee migrant youths and educated youths, Rs. 20 lakh for Dalit entrepreneurship, Rs. 25 lakh for startups, Rs. 50 lakh for industrial boiler replacement, and Rs. 5 lakh for private housing construction by natural disaster victims. A new Gen-Z Movement Martyr and Injured Persons Self-Employment Enterprise Loan of up to Rs. 15 lakh has also been introduced for eligible family members of martyrs and individuals injured during the movement. The government will provide a 3% interest subsidy for up to five years, while banks may charge an interest rate of no more than 1.5 percentage points above their applicable base rate. The revised procedure also requires banks to decide on complete loan applications within 15 working days and provide written reasons for rejection within three working days. The scheme covers productive sectors including agriculture, cottage and small industries, IT and tourism, while startups must generally be registered for no more than 10 years, have annual turnover of no more than Rs. 15 crore, and be based on innovative and growth-oriented business models. The government has also introduced partial support for credit guarantee fees and insurance premiums on loans of up to Rs. 15 lakh. Concessional loans will remain available until the end of Ashadh 2087, with only one member of a household eligible to obtain such a loan. The government may recover the full interest subsidy, along with interest, if a concessional loan is found to have been misused.