Nepal Rastra Bank has revised its loan classification framework, allowing non-performing (inactive) loans to be upgraded directly to the “good” category three months after full repayment of principal and interest. Previously, such loans were required to remain on a watch list for six months. Under the new guidelines, restructured or reclassified loans outside formal restructuring schemes must remain in their existing category—substandard, doubtful, or loss—for three months after repayment before being upgraded. The change is intended to streamline recovery and reclassification procedures.
