According to businesspersons who were part of the delegations, the central bank has indicated flexibility to address the private sector's demand. After the new coalition government led by Pushpa Kamal Dahal was formed and Bishnu Poudel took charge as the finance minister, NRB governor Adhikari initiated consultations with the umbrella organizations of the private sector.
Sources said Governor Adhikari during Monday's meeting with FNCCI President Golchha and CNI President Agrawal put forward a middle point. He asked both business leaders to come up with concrete proposals on working capital loans guidelines by Tuesday. According to an FNCCI source, Golcha and Vice President Anjan Shrestha agreed on the middle point of providing 'two years to the old debtors and implementing guidelines for the new borrowers'. "However, FNCCI has made some changes in its demand after holding discussions with the presidents of the provincial chapters of FNCCI as district chapters have been demanding to adopt flexibility in the implementation of the guidelines in the case of new borrowers as well," the source said. As per the guidelines, a borrower can receive working capital loans up to only 20 percent of their annual turnover if it is less than Rs 20 million. Similarly, a borrower can receive up to 25 percent of the total annual turnover if they have an annual turnover of over Rs 20 million. The NRB is of the view that the main motive behind introducing the working capital guidelines is to deter the firms from diverting the loans for other purposes. Central bank officials believe that due to a diversion of working capital loans for other purposes such as imports, investment in real estate, and the stock market, BFI lending surged contributing to ballooning imports in the past. “Many businesspersons invested the money they borrowed as short-term working capital loans in long-term investments such as real estate and now they are struggling to cash in on those properties to bring the loan exposure to the set limit,” said an NRB official. The private sector has been demanding suspension of the implementation of the guidelines arguing that the arrangements have adversely affected their businesses. FNCCI has termed the guidelines on working capital loans as the 'major obstacle to the business and private sector growth'. Amid continued protests from the private sector, the central bank on November 16 sought advice from the stakeholders to see if there was any problem with implementing the provisions of the guidelines. While issuing the first quarterly review of the monetary policy for FY2022/23, the central bank also promised to make necessary changes based on suggestions. At that time, though NRB said it was ready to make necessary amendments to the guidelines, the central bank, however, remained steadfast about the need for such monetary arrangements. Nonetheless, with the formation of the new government and CPN (UML) leader Bishnu Paudel becoming the new finance minister, NRB has seemingly softened its stance. Observers say that this is due to the pressure of the finance minister who has promised the private sector leaders to resolve the issues business community members are facing at present. A senior NRB official acknowledged that they are now in discussion with the private sector on resolving the working capital loans issue. "At the moment, there have been talks with them (private sector). The issue of rescheduling the working capital loans is also under discussion. But no conclusion has been reached. We have also sought feedback from the banks and financial institutions about the problems in the implementation of the guideline," said the official.
