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Aug 03, 2021

Considering the mountains trend of unemployment in the country which has been worsening further due to the Covid 19 outbreak, the Nepal Rastra Bank( NRB) has introduced this subsidized loan. This would help those youths who would otherwise leave the homeland for foreign employment mainly in gulf countries by providing them with a platform to explore more business opportunities. The loan scheme is expected to add more value to the business of the young entrepreneurs who have just started or are about to start their business mainly on small & medium size scales.

What are the eligibility criteria for obtaining the loan?

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

  • Must hold a PAN
  • Not be blacklisted under the Karja Suchana Kendra
  • Must have completed a secondary level of education or equivalent thereof
  • Must have obtained at least 7 days of training from the Office/Committee of Cottage & Small Industries or Vocational & Skill Development Training Centre or Council for Technical Education and Vocational Training (CTEVT) or any other Government Institutions.
  • A brief proposal about the business and utilization of the loan
  • In case the business is run by a group, documents relating to the group guarantee

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?

At present, it is Rs 5,00,000 (Five lakh only)

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

At present, it is 5 years only.

What would be the highest interest rate for the loan?

The  interest rate would be as follows:

  • Base rate of the bank + up to 2% spread  

Is there any requirement for furnishing collateral for the loan?

Following are the collateral for the loan.

  • Business/occupation run by the applicant
  • Documents submitted while applying for the loan

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 concerning the proposed business & utilization of the loan
  • Self-declaration of the applicant that he/she is not blacklisted as per the Karja Suchana Kendra
  • Documents relating to the collective guarantee, if applicable
  • Certificate issued by the training institute concerning the training of minimum 7 days as discussed earlier

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.

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

At first, circular no. 4/2077-78 dated 13 October 2020 issued by the NRB which primarily deals with the subsidized loan including the Youth Self Employment Loan has not prescribed any particular areas for utilization of such loan. This requires clarification from the NRB.

However, since this loan is similar to that of the Educated Youth Self Employment Loan, the desirable areas of utilization of this loan are also likely to be the more or less the same as applicable to the  Educated Youth Self Employment Loan which is as follows:

  • 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 by-law, kindly click on this link.

Note: Since the circular has not prescribed any areas of utilization of the loan clearly & to remove any future litigation on this behalf, you are requested to obtain the list or any reference from your lending bank in writing about the same while processing the loan. 

What if I have utilized the loan other than for business purposes?

If it is found during the inspection by the bank that you have utilized the loan amount other than for the business purpose then no further interest subsidy will be provided to you. 

 Further, you will be liable to pay back all the interest subsidies you have availed yourself previously.

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.