Nepalese can borrow up to 500,000 rupees online

Nepalis can now borrow up to 500,000 rupees from their internet banks and save themselves a trip to the bank office.

On February 11, Nepal Rastra Bank released the Digital Lending Guidelines 2022 allowing customers to obtain loans of up to Rs 500,000 from their banks’ digital platforms or from an e-wallet from the comfort of their own home. home or anywhere else.

The policy will facilitate small loans for micro, craft and small businesses, personal loans and education loans, officials said.

According to the central bank, employees holding salary accounts and professional and entrepreneurial account holders can obtain loans of up to Rs 500,000. For other account holders, the maximum limit has been set at Rs200,000.

The repayment period for both categories of loans is three years and repayment can be made in installments.

Guru Prasad Poudel, executive director of the central bank, said the move was aimed at making the digital payment ecosystem inclusive. “It’s also a preparation towards a cashless society,” he said.

“The applicant must submit the required documents digitally, Poudel said. “Small borrowers for micro, craft and small businesses, as well as people looking for personal or education loans can benefit from this program.”

When receiving loan applications from customers, banks and financial institutions must create a separate portal for the flow of digital credit, according to the guidelines.

Banks can receive loan applications through their mobile application. Once the loan is approved, the client will be notified via digital media.

“Banks will track applicants’ creditworthiness in addition to observing their other online transactions before granting the loan,” Poudel said.

According to central bank guidelines, customers should be clearly informed early on of the additional fees for taking out loans digitally. Banks are allowed to collect only loan servicing fees and third party fees from their borrowers.

If payment service providers are the official representatives of the digital lending process, banks and financial institutions should not charge customers.

Licensed payment service providers using technology will facilitate loans by creating contact between potential customers and banks and financial institutions.

The directive states that if a borrower fails to repay the loan, loan interest and penalty interest within the specified time, the bank or financial institution must write to the Credit Bureau to blacklist such borrowers in accordance with the laws in force.

Banks and financial institutions must also submit details of digital loans issued every three months to the central bank.

Customer details and financial information must not be used or distributed for any other purpose without the customer’s approval, and the information must be stored securely, according to the directive.

Amit Agrawal, co-founder and director of Khalti, a digital wallet system, welcomed the central bank’s decision.

“We have created e-wallet services not only for payment, but also for digital financial services. Digital financial services mean access to financial services as well as capital,” said Agrawal.

Transactions through digital payment systems have increased significantly in recent years, and the development and expansion of digital payment-related infrastructure such as real-time gross settlement (RTGS), interbank funds transfer, card payment, mobile wallet, mobile banking and internet banking have played an important role. role in the dissemination of online transactions.

Digital payments during the period from mid-December to mid-January, the sixth month of the current financial year, amounted to 5.14 trillion rupees with 54.56 million digital transactions. In the previous month, there were 49.45 million transactions worth Rs 4.84 trillion.

Poudel said that since the month-long period from mid-December to mid-January marks the end of the second quarter, the volume of payments generally increases. This time it has increased by digital means.

“The increase in transactions also shows that more people are doing most of their transactions online,” he said.

A breakdown by online payment platforms shows that 3.68 trillion rupees worth of transactions were made via RTGS from mid-December to mid-January.

The figure represents a sharp increase from the 1.68 trillion rupees recorded during the same period last financial year.

Transactions through the interbank payment system between mid-December and mid-January totaled 167.79 billion rupees, compared to 242.53 billion rupees during the same period of the previous year.

According to the central bank, ConnectIPS payments during the reporting period rose to Rs 247.47 billion from Rs 100.77 billion in the same period last fiscal.

Internet banking also reached 13.49 billion rupees during the reporting period from 8.50 billion rupees previously.

Transactions through mobile banking increased from 33.15 billion rupees to 94.40 billion rupees, and wallet transactions increased from 9.65 billion rupees to 16.27 billion rupees.

According to the central bank, payments based on Quick Response (QR) code during the period from mid-December to mid-January increased from 1.24 billion rupees to 6.52 billion rupees.

Point-of-sale electronic funds transfer (retail transactions) also increased to 4.39 billion rupees during the review period from 3 billion rupees previously.

E-commerce transactions using cards fell to 349 million rupees during the reporting period from 843 million rupees during the same period last fiscal year.

Payment service providers say they plan to introduce the loan system soon.

“It will take us a few months to introduce lending services from our platforms as we need to build a system and collaborate with banks. We need to prepare a separate team to deliver the service,” Agrawal said. “This is one of the greatest achievements in itself and a milestone in the country’s digitization efforts.”

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