The central bank has reduced the maximum limit of refinancing loans that businesses can take from refinancing facility through banks and financial institutions (BFIs) to Rs 50 million per individual, and per business.
Issuing a ‘Refinancing Guidelines’ today, the central bank lowered the maximum limit of refinancing facility to businesses and individuals from Rs 500 million to Rs 50 million to ensure that more businesses have access to the subsidised loan facility. More the businesses get this facility to cope with the impact of coronavirus pandemic, faster the economy can bounce back, according to the central bank. “The businesses and individuals can now borrow Rs 50 million refinancing loans from BFIs at low interest rate of up to five per cent.”
The provision that compels every bank branch to release at least five subsidised loans and bring down the limit of such loan to borrowers will help more borrowers to access the refinancing loan facility, the guidelines reads, adding that the businesses can get up to Rs 200 million refinancing loan at five per cent interest rate from the central bank’s refinancing fund.
Earlier, the central bank had prepared a draft of the Refinancing Guidelines and brought down the limit of refinancing loan for individual and businesses to Rs 100 million. But the central bank – after the Monetary Policy for the current fiscal year – has further reduced the limit to Rs 50 million to ensure access to maximum number of businesses and people. “Refinancing loan that businesses acquire from BFIs and central bank will have maximum maturity period of one year with no renewal condition,” it reads.
The BFIs should give Covid -affected businesses top priority, when issuing such loans, while people with low income and those from marginalised sections should be given priority, the guidelines further reads, adding that small and medium enterprises (SMEs), industries that use domestic raw materials and those contributing to substitute import should also be considered eligible for such loans.
The central bank can float up to Rs 200 billion refinancing loan in the market as per necessity. Likewise, some 70 per cent resources of the refinancing fund will be mobilised through BFIs, though central bank itself had been mobilising refinancing fund.
The new provision, however, bars firms with return on equity (RoE) of more than 20 per cent annually from such refinancing loan facility. Industries related to tobacco and liquor are also barred from such refinancing loan facility from the central bank and BFIs.
Issuing a ‘Refinancing Guidelines’ today, the central bank lowered the maximum limit of refinancing facility to businesses and individuals from Rs 500 million to Rs 50 million to ensure that more businesses have access to the subsidised loan facility. More the businesses get this facility to cope with the impact of coronavirus pandemic, faster the economy can bounce back, according to the central bank. “The businesses and individuals can now borrow Rs 50 million refinancing loans from BFIs at low interest rate of up to five per cent.”
The provision that compels every bank branch to release at least five subsidised loans and bring down the limit of such loan to borrowers will help more borrowers to access the refinancing loan facility, the guidelines reads, adding that the businesses can get up to Rs 200 million refinancing loan at five per cent interest rate from the central bank’s refinancing fund.
Earlier, the central bank had prepared a draft of the Refinancing Guidelines and brought down the limit of refinancing loan for individual and businesses to Rs 100 million. But the central bank – after the Monetary Policy for the current fiscal year – has further reduced the limit to Rs 50 million to ensure access to maximum number of businesses and people. “Refinancing loan that businesses acquire from BFIs and central bank will have maximum maturity period of one year with no renewal condition,” it reads.
The BFIs should give Covid -affected businesses top priority, when issuing such loans, while people with low income and those from marginalised sections should be given priority, the guidelines further reads, adding that small and medium enterprises (SMEs), industries that use domestic raw materials and those contributing to substitute import should also be considered eligible for such loans.
The central bank can float up to Rs 200 billion refinancing loan in the market as per necessity. Likewise, some 70 per cent resources of the refinancing fund will be mobilised through BFIs, though central bank itself had been mobilising refinancing fund.
The new provision, however, bars firms with return on equity (RoE) of more than 20 per cent annually from such refinancing loan facility. Industries related to tobacco and liquor are also barred from such refinancing loan facility from the central bank and BFIs.
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