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Blog Post

Jul 12, 2021

In order to provide youths, who have returned home after their foreign employment, a platform to utilize their entrepreneurship, and talents and to mobilize their resources in nation-building, the Government has introduced this loan. This would also help in creating jobs on a trim level that have been severely affected due to Covid -19 outbreak.

It may be noted that the central bank has introduced a total of 10 types of subsidized loans via Integrated Procedure for Subsidized Loan & Interest Grant 2075 (Along with 3rd Amendment) vide circular no 4/2077-78 dated 13 October 2020. This Foreign Employment Returnee Youth Loan is one of the major players in the scenario.

Let’s see the  other important aspect that you need to know about the loan: 

Where can I apply for the loan?

For this, you can apply to all the 4 classes of the banks i.e. commercial banks, development banks, finance companies & micro-finance institutions.

What is the maximum amount I can apply for the loan?

I can apply for a soft loan of up to Rs. 10 lakh.

What would be the highest interest rate for the loan?

Base rate of the bank + up to 2% spread 

What is the maximum period I can apply for the loan?

At present, it is 5 years only.

What are the eligibility criteria for obtaining the loan?

The eligibility criteria for applying for the loan are as follows :

  • He/she must have stayed in a foreign country for a period of at least 6 months.
  • A brief business plan should be submitted that clearly mentions how the enterprise would operate.
  • He/she shall not hold any Permanent Resident (PR) or Green Card.

It may be noted that the youth who did not hold any work permit while in foreign employment is also eligible to apply for this loan.

Is there any requirement for furnishing collateral for the loan?

No other collateral but the project itself shall be taken as collateral for the loan.

Is this compulsory to cover my business with insurance?

Yes, You must cover your business with the insurance irrespective of any limit.

Can I get an insurance subsidy along with the loan?

Yes, once you apply for business insurance under this scheme, you have to pay only 50% of the insurance premium. Rest the insurance company will recover from the NRB via the Insurance Board.

What are the documents required to apply for the loan?

The following documents are required to apply for the loan:

  • Loan application form
  • PAN copy
  • Citizenship copy
  • Brief proposal for the loan applied
  • Detailed Project Proposal with respect to the proposed business & utilization of the loan, other than for Mahila Udyamshil Karja, for a sum exceeding Rs 10 lakhs.
  • Self-declaration by the applicant that he/she is not blacklisted as per the Karja Suchana Kendra.
  • Passport, Visa, Work Permit (if obtained)
  • Self-declaration that:
  • He/she has stayed in a foreign country for a period of at least 6 months &
  • He/she is not holding any Permanent Resident or Green Card 

What are the areas in which I can utilize the loan?

The Nepal Rastra Bank (NRB) has, vide the circular, prescribed the following areas for utilization of the loan: 

  • Agriculture
  • Industry
  • Service

For more details, kindly click on the link below and refer to the pages number from 34 to 38.

To read the full text of the bylaw, kindly click on this link.

Can the bank deny my loan application?

Whether to provide the loan or not is the sole discretion of the bank. However, the bank has to inform you in writing within 21 working days of the loan application made about whether to sanction the loan or not.
In case the bank did not sanction the loan, it shall give the applicant a clear basis and reason thereof.