Kathmandu: The government has released Rs 10.58 billion at once for the pending interest subsidy on subsidized loans that had not been reimbursed for the past two years.
The amount was due from the government for the interest subsidy on subsidized loans since July 2023.
Rameshore Khanal, finance minister in the interim government formed following the Gen Z movement on September 8 and 9, decided to release the amount for the subsidy payment. After the Ministry of Finance approved the release, the Nepal Rastra Bank (NRB) transferred the funds to the respective banks on Tuesday, said Guru Prasad Paudel, head of the NRB’s Banks and Financial Institutions Regulation Department.
According to Executive Director Paudel, the released amount of Rs 10.58 billion covers the interest subsidy for seven quarters — from July 2023 to the end of March 2025.
Paudel said some amount from the funds released to the NRB remains in reserve, which will be used to pay off the remaining backlog of interest subsidies up to the last fiscal year by next quarter. He added that the interest subsidies have now been paid up to last March, and payments up to June will be completed in the coming quarter. For the current fiscal year, the process will move ahead as per the budgetary provisions.
With this decision, Rs 10.58 billion has entered the market at once. If banks have already paid the subsidy amount to borrowers, this will further ease their liquidity. If not, borrowers will receive the large sum of the subsidy in their accounts before Tihar and Chhath festivals. Paudel said this release will have a positive impact on overall economic activity. He added that around 98,000 borrowers with subsidized loans will feel immediate relief from the payment of this interest subsidy.
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