The Government of Nepal has announced a provision to offer collateral-free loans to Nepali youths aspiring to work abroad. This provision has been introduced through the monetary policy for the fiscal year 2082/83 BS, released by the Nepal Rastra Bank on Friday.

According to the new policy, male migrant workers will be eligible to receive loans of up to NPR 300,000, while female migrant workers can receive up to NPR 500,000. As these loans will be provided without requiring collateral, the government believes this move will significantly benefit economically disadvantaged youths.

Classified Under ‘Deprived Sector Lending’

The Nepal Rastra Bank clarified that the loans, to be disbursed through banks and financial institutions in coordination with the Ministry of Labour, Employment and Social Security, will be categorized under the “Deprived Sector Lending.” Since the loan ceiling is higher for women, the initiative is expected to encourage more female participation in foreign employment.

Relief from High-Interest Loans from Moneylenders

In the past, many aspiring migrant workers were forced to borrow from local moneylenders at exorbitant interest rates to cover expenses such as flight tickets, visa fees, and other pre-departure costs. The Ministry of Labour believes that with this new provision, they will now have access to affordable and formal financing through the banking system.

Implementation Procedure Underway

According to Labour Minister Sharatsingh Bhandari, the ministry has already initiated the process of drafting the procedures required for the distribution of these collateral-free loans. Minister Bhandari stated, “Workers have long been forced to take loans at high interest rates. Now, we are making arrangements to provide them with easy loans through the banking system.”

Repayment Through Foreign Earnings

As per the government’s plan, individuals who take loans under this scheme will repay them with the income they earn while working abroad. The implementation guidelines will also include provisions to ensure transparency and monitoring in the loan disbursement and repayment process.