GOOD MORNING

EVERYONE
Presentation on “Latest Circulars Issued by NRB”

Presenter: Aastha Sapkota

 Latest NRB Circulars

Overview CIRCULARS AMENDMENTS

2076-77
Disclaimer

The information contain in this document is

compiled only for the purpose of
discussions and interaction. However,
detailed study is recommended before
taking any decision on the matters
contained herein
Overview
 Circulars are issued by NRB from time to time so that amendments or
changes can be made on the Unified Directives issued by Nepal Rastra
Bank for Bank and Financial Institutions after the Unified Directives for
the year has already been issued.
 The Circulars issued for the whole year are then complied and added in
the Unified Directives for the next year.
 The presentation contains details of circulars from circular no.6 of A, B
and C Class BFI as circulars issued up to 2076/07/15 (Up to Circular 5)
has already been included in Unified Directives 2076. Also, It contains
circulars no. 4 and 5 of D Class BFI.
Circular:6 AMLCFT Merger and Retained Earning Related issued on
2076/07/26

Amendment in 4/076 Point no. 3 (Kha)

 The tax and employee bonus shall be deducted from the receivable interest
income booked by the financial institutions except for interest income booked
on accrual basis and the remaining amount after deducting tax and employee
bonus shall be transferred from Retained earnings to Regulatory fund. Once the
interest income is received, it can again be transferred to Retained Earnings.
 The tax and employee bonus shall be deducted from the Non-banking assets
and the remaining amount after deduction shall be transferred to regulatory
fund.
Amendment in 6/076 Point no. 7 (5)
AML CFT Committee shall be formed comprising:
1. Non- Executive Director. Chairperson
2.Compliance head, Member
3. Risk Management department head, Member
4. Implementation Officer as mentioned in Directives 19(18)(2), Member Secretary
 At least 1 specialist or Expert can be invited.
 Meeting shall be held at least once in 3 months.
Addition in 6/076 Point no. 8 (Ja)
Share Transaction of Merged Entity and Acquisition
 The Directors, CEO, auditor, Company Secretary, Managerial level staff and
staff involved indirectly in accounting of BFI shall not do any transaction of
the securities of such BFI and its subsidiary when they are in the post or
before completion of 1 year of leaving such post.
 However, in case of merger and acquisition of BFI with another BFI, and if the
Directors, CEO, auditor, Company Secretary, Managerial level staff and staff
involved indirectly in accounting does not work anymore than with the
approval of NRB and within the prevailing law can do share transaction of BFI
and its subsidiary.
 Circular_07-Amendment_in_Interest_Subsidy
 As per Decision of Nepal Government dated on 076/07/29, there is
amendment in Interest Subsidy Guideline 2075 (Second amendment 2076)

CIRCULAR_08-INTEREST_SUBSIDY ISSUED ON 2076/08/11

• AMENDMENT IN 2/076 POINT NO. 8 (JA)-

• (KA) THE SUBSIDY TO BE PROVIDED BY GON AS MENTIONED IN THE INTEREST

SUBSIDY ON SUBSIDIZED LOAN GUIDELINE 2075 SHALL BE DISBURSED BY NRB. THE
INTEREST SUBSIDY TO BE RECEIVED FROM GON MAY BE GIVEN THE RISK WEIGHTAGE
OF 0% AT THE TIME OF CALCULATION OF CAPITAL FUND RATIO.

• (KHA) FOLLOWING NO. OF CONCESSIONAL LOANS SHALL BE DISBURSED BY

LICENSED INSTITUTION TILL THE END OF 2077 ASADH EXCEPT FOR AGRICULTURE
AND LIVESTOCK
Check this out !

Licensed Institutions Minimum no of files to be

disbursed up to 2076
Ashadh end

Class A 500
Class B 200
Class C 100
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Circular_09-DTI, _Deprived Sector & AML related issued on 2076/09/08

Addition in 2/076, 1(2)

 The loans not maintaining the Debt Service to Gross Income Ratio shall be
added as Under watchlist loan
Addition in 2/076, 40-
Debt Service to Gross Income Ratio to be maintained at 50% at maximum for
non- commercial Loan like personal term loan, home loan, hire purchase loan
whose payment is received on installment basis.
 Following documents to be maintained:
a) Income verifying documents of borrower.
b) Yearly gross income shall be verified based on Tax Clearance.
c) Otherwise it shall be categorized as Watchlist loan
Amendment in 17/076 Point no. 17
 "A" B and C class licensed institution shall disburse 25%, 15% and 10% of it's total
loans and advances in the priority sector,
(10% in Agriculture sector, and 15% in another priority sector for A class)
 Time limit for the merged bank who started the operation within 2077 Asadh is 2078
Asadh End.
 The compensation for not disbursing the minimum loan to be disbursed is the
highest rate of interest charged by the concerned bank on the deficit amount of loan
to be disbursed.
The monthly details of loan disbursed to priority sectors shall be reported to NRB within
15 days of end of the month as per Format 17.1 and the quarterly detail shall be
reported within 30 days of end of the quarter as per format 17.2 in the regulatory and
Supervision department.
Amendment in 19/076, Point No. 11
Regarding Information of suspicious transaction, time limit for submission
of risk assessment report and proper implementation of Money Laundering
Prevention through Electronic Medium:
1. Customer details shall be regularly updated in the core banking system
of bank and another electronic medium.
 AML reporting to be done by the A class licensed institution compulsorily
through go-AML- Production Environment from Magh 1, 2076.
 B and C Class licensed institution shall be registered on go-AML within
2076 Poush End and Reporting to be done through go-AML Test
Environment from 2076 Magh. Similarly, reporting shall be done through
go-AML- Production Environment from 2077 Shrawan 1.
Continue……

 The report regarding Corporate and regional risk assessment report for
money laundering minimization shall have to be submitted within 2076
Poush end in the NRB Supervision department.
 The necessary work procedure, policy and system shall have to be
formulated for money laundering prevention as per the risk
assessment, also risk-based KYC/inspection/suspicious transaction
identification procedure shall be formulated and effectively
implemented within 2076 Magh end and the same shall be reported to
supervision department.
 Inspection shall be done by the NRB for above related activities.
Circular_10- Attachment to NRB Refinance
Procedure 2076 related Issued on 2076/09/29

To be implemented from 2076/10/01

 Point no. 4 Interest on Refinance loan shall be as per interest finalized by
NRB on time to time basis.
 Point No. 5 Limit of Refinance Loan – As decided by NRB BOD from time
to time.
 Point no. 6 Tenure of Refinance loan shall be decided during submission
of such loan and it shall not exceed the period of 1 year.
 Point 7 Documents required during application submission for refinance
loan
 Point No. 10 Renewal may be done for the period of 1 year
Continue……

 Monthly details of refinance loan shall be submitted by BFI to the

supervision department within 15 days of end of month as per Annex-5.
 Maximum limit for refinance loan for pass loan of an individual customer
shall be 50 crores. However, this provision does not apply for consortium
financing.
 The details of customer whose collateral has been kept for refinance
loan shall be publish in the website of BFI in every quarter within 7 days
of end of quarter.
 Point no. 12 Penal interest of 3% shall be paid if the refinance loan could
not be paid within the time limit.
Circular_11-DTI_CCD_related
Issued on 2076/09/29
Amendment in 2/076 Point no. 40 (Kha)
 Gross Income of the borrower shall be calculated as per the updated tax
clearance certificate or tax paid certificate in case of taxable income.

Amendment in 5/076 Point no. 6 (6)

 Credit to Core Capital and Domestic Deposits - CCD shall not exceed
80% for minimizing the risk of liquidity of licensed institutions. However.
The amount for debenture issued by Bank and financial institutions for 5
years and above in the domestic currency and the loan taken by BFI on
foreign currency for 3 years and more, then 100% loan can be disbursed
from such amount.
Circulars Issued for D Class licensed
institutions
 Up to Circular 3 has already been Included in the Unified
Directives for D Class
Circular:4 Agriculture Loan Annex Related
 Format for Annex 17.2 has been added regarding monthly details of loan
investment in agriculture.

Circular 5: Amendment in Interest Subsidy

It is same as Circular 7 for A, B and C Class Licensed Institutions
ANY QUERIES ?