Getting a bank loan in Nepal is set to become a little easier. Nepal Rastra Bank has changed its rules so borrowers will no longer be required to submit a tax clearance certificate every year to continue or renew their loans.
The central bank issued a new circular to banks and financial institutions, updating how loans are approved and reviewed. Instead of focusing only on tax clearance papers, banks are now asked to look at the borrower’s real financial situation.
Under the new rule, banks must assess a borrower’s total income, regular expenses, tax responsibility and ability to repay loans. This means decisions will be based more on whether a person can actually handle the loan, rather than on a single document.
Banks can now use other documents such as income details submitted earlier, salary slips, TDS or VAT returns, bank transaction records and proof of income sources to continue or renew loans. However, the obligation to pay taxes remains in place, and banks are not allowed to ignore tax liabilities while approving loans.
Nepal Rastra Bank has also warned banks to be careful. If a loan is given beyond the approved repayment capacity, it must be placed under a watch list. This move aims to stop careless lending, especially to borrowers with unclear income or tax status.
Experts say the new approach is meant to remove unnecessary delays in lending, while still keeping financial discipline intact. It is expected to help honest borrowers who earn formally but struggle to submit tax clearance certificates every year, without encouraging tax avoidance.
