Government revises concession loans, subsidy capped at 3%

The government has revised its concessional loan guidelines, cutting interest loan subsidies to 3% under the newly issued Interest Subsidy Procedure for Concessional Loans, 2082. Previously, loans under 10 categories were provided with a subsidy of 5-6%. 

According to the new guidelines, the eligible categories have been reduced to eight, which include agricultural and livestock, women entrepreneurship, self-employment of returnee migrants, educated youth projects, Dalit community enterprise development, startup enterprises, industrial boiler installation, and private home construction for natural disaster victims.

Under the new guidelines, the loan ceiling has been set as follows:

These loans must be repaid in instalments. Applicant must be a Nepali citizen aged 18 or above, not blacklisted by the Credit Information Bureau, and only one member per household can receive concessional loans. The interest subsidy is available for up to 5 years, with banks not allowed to add more than 1.5% to their base rate throughout the subsidy period.

Startup enterprises eligible for the scheme must be registered as private, partnership, or cooperative, operating for not more than 10 years, have an annual turnover below NRs 15 crore and demonstrate rapid growth through innovation.

Any misuse of loans will lead to immediate suspension of the interest subsidy, and banks will recover the amount disbursed to date. Moreover, borrowers are obligated to showcase a visible signboard displaying government support for their project.

Bank and financial institutions (BFIs) need to ensure proper loan utilisation. The central bank has directed all BFIs to publish quarterly reports listing current borrowers under the guidelines to ensure transparency and proper monitoring.