On Dec. 24, NPL CB amended rules on loan restructure and extension.
NPL CB amended unified directive to category D microfinance financial institutions, infrastructure development bank, category a, b, c licensed institutions.
Category D Microfinance
Considering the necessity and appropriateness based on circumstances, microfinance financial institutions shall be able to reschedule the loans of borrowers.
Such rescheduling and/or restructuring should be completed by Jul. 15, 2024.
Loans classified as performing as of the end of Apr. 13, 2023 may be rescheduled and/or restructured with maximum extension of loan repayment period by 1 year.
Infrastructure Development Bank
The bank can restructure loans invested in various industries, including hotels, restaurants, construction, education, health, physical infrastructure, transportation.
Borrowers can request loan restructuring with a minimum interest rate of 10 percent.
Certain conditions apply, including completing restructuring by Apr. 12, 2024 and classifying loans as active as of Jul. 16, 2023 for rescheduling and/or restructuring.
Loan loss provisions of 5 percent are to be established for restructured loans.
Restructured loans should be categorized in the same category as they were before.
Category A, B, C Banks, FIs
Eligible sectors for loan restructuring include agriculture, fish farming, mining, non-alcoholic beverage production, non-food product production, metal production, transportation, warehousing, tourism, education, health, and construction.
Borrowers can request loan restructuring with a minimum interest rate of 10 percent.
Certain conditions apply, including completing restructuring by Apr. 12, 2024 and classifying loans as active as of Jul. 16, 2023 for rescheduling and/or restructuring.
Residential house reconstruction loans for earthquake-affected families are also addressed, with specific conditions and premium rates mentioned.
Includes provisions for calculation of premium rates, loan classifications, also mentions risk weights for various types of loans, including real estate, lending against shares.
Jan. 2024 Notice of Consolidated Circular
On Jan. 11, 2024, NPL CB notified regarding issuance of consolidated circulars above.
In Jan. 2024, NPL CB proposed guideline regarding expected credit loss, see #197836.
Aug. 2024 Loan Restructuring and Rescheduling
On Aug. 27, 2024, NPL CB issued directive to category D licensed microfinance FIs, which can restructure and/or reschedule loans, in the context of difficulties faced by borrowers in repaying loans due to circumstances beyond their control.
Loan repayment period can be extended by up to 3 years; 5% loan loss provision must be maintained for loans restructured and/or rescheduled as per the above provisions.
For loans classified as non-performing, existing loan loss provision must continue during restructuring/rescheduling, cannot be adjusted unless loan is regular for 1 year.
Clear justifications for restructuring/rescheduling must be documented in each loan file; at least 5% of outstanding interest must be recovered at time of restructuring.
Outstanding interest cannot be capitalized or shown as income during restructuring; it must be accounted for separately, only shown as income after it is recovered.
No fees or penalties can be charged to borrowers for restructuring/rescheduling; loans can only be reclassified as good loans after 6 consecutive months of regular payments.
Borrowers who pay off their loans or whose loans are restructured under this directive must be recommended for removal from the blacklist by the concerned institution.
The restructuring or rescheduling must be completed by Jan. 13, 2025.
