DOI Procedure regarding Government of Nepal Startup Enterprise Fund Procedure, 2079

Startup Enterprise Fund Procedure, 2079 (the “Act”) was approved on 10th Falgun 2079. This Procedure tries to make the operations related to granting concessional loans simple, clear, comprehensive and effective to encourage entrepreneurs with the latest knowledge, thinking, skills and abilities to engage in start-up enterprises.

1. What is a startup enterprise according to the Government of Nepal (“GoN”)?

A startup enterprise refers to any enterprise or business operating with the use of novel innovation and creative idea by an entrepreneurial group for the development, production, operation, and distribution of any goods, services, or process, that have the potential for progress.

2. In which sectors of enterprise can startup industries operate?

In following sectors enterprises can operate as startup industries:

S.N Industries
1. Agriculture and poultry based,
2. Forest based (herbs, and forestry products),
3. Tourism promotion, entertainment and hospitality related,
4. Science, technology, information, and communication technology based,
5. Human health services related,
6. Education and educational institutions related,
7. Accessible and safe travel and transportation related,
8. Infrastructure construction related,
9. Automobile related,
10. Dedicated to improving processes related to traditional technology, production methods and services,
11. Mines and mining research and development related,
12. Dedicated to aiding domestic and daily affairs, their ease, convenience and safety,
13. Food production and processing based,
14. Waste management and environment-related.


3. What are the criteria for startup enterprises/entrepreneurs to apply for this scheme?

Startup enterprises that fulfil the following criteria may apply for the Startup Enterprise Fund Scheme, 2079:

i. Registered and in operation, but for no more than 7 years before the publication of this notice,

ii. Fulfil at least 3 of the following criteria from (a) – (d), and 2 of the following criteria from (e) – (g).

(a) Paid-up Capital: Paid-up capital of no more than NPR 5 million (NPR 50 lakhs),

(b) Gross Income: Gross income of no more than NPR 5 million (NPR 50 lakhs),

(c) Fixed Capital: Fixed capital (apart from land and building) of no more than NPR 20 million (NPR 2 crore),

(d) Employment: Employing no more than 10 full-time employees,

(e) Use of Information Technology: Utilization of information technology and innovation for providing goods or services that have come into development for the purpose of resolving consumer issues,

(f) Allocation of Expenditure: At least 5% of total expenditure allocated for product development, market research and development,

(g) Intellectual Property Protection: Either registered intellectual property of goods/service as patent, or design, or software, or eligible to be registered as patent, or design, or software.

4. Notwithstanding anything mentioned above, what are the conditions under which a startup enterprise will not be able to obtain the loan?

Following are the conditions under which a startup enterprise will not be able to obtain loan:

a. The enterprise has not been legally registered in Nepal,

b. The enterprise has not utilized technology and innovation found in Nepal, and are simply importing goods and services from abroad,

c. The enterprise is a subsidiary company/firm of an existing company/business,

d. The enterprise or entrepreneur behind the enterprise has been blacklisted in the Credit Information Bureau,

e. The enterprise has not obtained a Permanent Account Number (PAN) for taxation purposes,

f. The enterprise is classified as a medium-large holding company as per the Industry Enterprises Act (EIA), 2076, or

g. The enterprise has been banned by existing laws for other reasons.

5. What are the obligations of the entrepreneur?

In addition to the obligations mentioned elsewhere in this procedure, the obligations of the entrepreneur who has received the loan pursuant to this procedure shall be as follows:

a. The loan amount should be used only for the purpose mentioned in the project,

b. To repay the installment amount along with the principal and interest of the loan as mentioned in the agreement,

c. Provide necessary information and data during the monitoring carried out by the committee and the bank,

d. Submit the progress report of the startup entrepreneurship to the committee secretariat and lending bank annually,

e. At the project site, a board with the words ‘Government of Nepal’s Subsidized Loan Facilities’ shall be put up for the general public to see,

f. To follow the instructions given by the committee and the bank.

6. What is the amount chargeable by the bank for receiving the loan?

According to this procedure, the bank that provides the concessional loan, may take payments of the following:

a. Upon providing the concessional loan based on the agreement between the entrepreneur and the bank, the administrative/service tax shall be a maximum of 0.1%

b.  Entrepreneur shall be provided 0.5% of the installment amount out of the principal amount as a reward.

7. How long will the loan payment duration be?

a. The entrepreneur who has acquired the concessional loan based on this procedure, shall clear off the principal amount and interest as according to the agreement of the payment. However, if one wishes to pay off the debt before the time period, such entrepreneur will be able to do so, and the excessive charge will no longer be required.

b. An entrepreneur who does not clear off the loan principal and interest, such entrepreneur will be according to the prevailing law, will be put under default and the remaining amount will be collected as a government loan.

8. How will the bank keep a security on the loan ?

The bank will keep a security on loan by keeping the approved project as collateral for providing the concessional loan, by securing the loan with the Deposit and Credit Guarantee Fund as per the prevailing law for providing the loan according to this procedure and depositing the required fee while securing the loan, or the Deposit and Credit Guarantee Fund must be requested to the NRB.

9. What is the process map for submitting a proposal?

Following are the process of applying for fund scheme and particulars to pay attention to:

Steps Process Details
Step 1 The Executive Committee will inform the willing startup entrepreneurs who have applied for the scheme that they have 21 days in which they must propose their projects. This will be done through publication in the national daily newspaper, and electric means.
Step 2 The eligible startup entrepreneurs may apply for this loan concession. However, this application for the loan is only on the basis that the above mentioned criteria have been satisfied. Furthermore, such startup enterprises may only submit their project proposals for the loan once.
Step 3 Submission of the project proposal for the loan concession. The project proposal may be submitted in electrical form, in the manner as attached in Schedule-1 of the Notice.
Step 4 Self- declaration of documents. The project proposal shall contain all documents and descriptions as required, and the related entrepreneur shall self-declare that all such documents and descriptions contained in the proposal are accurate and correct.
Step 5 Punishment for falsified self-declaration. If the self-declaration documents and descriptions are found to be false, the proposal will be cancelled, and as per the prevailing law, will be sent to the relevant institution for punishment. Such proposers will be barred from applying in the future.
Step 6 Certification of the proposal by the Secretariat. After the submission, the Secretariat of the Executive Committee will certify the application.
Step 7 Submission to the Executive Committee. The proposal will then be submitted to the Executive Committee within 7 days of the submission deadline, after the certification.

10. Who will constitute the startup enterprise Executive Committee?

In order to carry-out the startup enterprise planning, select the environmental protection and investment protection plans, operate the enterprise in an organized manner, promote the startup enterprise, and support the startup enterprise in strategic, financial and technological matters, the startup enterprise Executive Committee shall consist of:

a. Director General, (Department of Industries (DOI)) – Coordinator

b. Deputy Secretary, (Ministry of Industry, Commerce and Supplies – Facilitation Branch) – Member

c. Assistant Registrar, (Office of the Company Registrar (OCR)) – Member

d. Director, (Commerce, Supplies and Consumer Protection Department) – Member

e. Assistant Director, (Nepal Rastra Bank (NRB)) – Member

f. Director, (Cottage and Small Industry Office) – Member

g. Director, (Department of Industries (DOI) – Honorable Member

Meetings of the Executive Committee shall be held at the appointed time, date and place, as decided by the Coordinator. The meetings of the Executive Committee may invite representatives, experts, and investors from the industry and commerce sectors, as deemed necessary.

The additional duties, obligations, and authority of the startup enterprise Executive Committee shall be as follows:

a. Entrepreneurs who fulfil the criteria mentioned above must be called to present their ideas and apply for the startup loan application,

b. Prepare details of the proposed project that has applied for the startup loan grant,

c. Prepare the evaluation and selection of the proposed project, creating a list and loan limit to be submitted/recommended to NRB,

d. The project proposal that has been selected for recommendation shall be informed to the NRB,

e. For the purpose of securing the loan, to facilitate and coordinate, or cause to facilitate and coordinate with the concerned body,

f. To prepare and submit a comprehensive annual report outlining the achievement of the project and the work progress of the project approved for the loan disbursement,

g. To organize or cause to organize the investigation of the startup enterprise,

h. To fulfil other obligations as specified by the Ministry.

11. Who is the Executive Committee Secretariat and what role will they play?

The Executive Committee Secretariat shall remain at the DOI. The Ministry shall arrange the necessary personnel and budget for the operation of the Secretariat’s obligations. The Secretariat shall carry out the following duties:

a. Record, collect and process information in respect of the project proposal for the loan disbursement,

b. Carryout and prepare a comparison examining whether the received project proposal has fulfilled the criteria for application,

c. Evaluate, select and recommend the proposed project before the decision making committee,

d. The project proposal that has been selected and recommended by the Executive Committee shall be sent to the relevant bank with the related documents,

e. Fulfil other obligations as specified by the Executive Committee.

12. What evaluation and recommendation process will the proposed project be subject to?

a. The Executive Committee must, and be made to evaluate the project proposal submitted through electronic means (as required in the format detailed under Schedule 1).

b. This evaluation must be done by either the Executive Committee themselves, or through the formation of a sub-committee. Depending on the area of the proposed project, the loan concession request might be subject to multiple sub-committees.

c. Until formed, during the formation of such sub-committees, the proposed project’s sector expert, entrepreneurship expert, the bank assigned for the loan disbursement, and other the members representing the organization of private industry professionals may be invited.

d. In conducting an evaluation, the proposed project and the presentation according to the format listed in Schedule 1 must be submitted.

The evaluation must be conducted according to the following (as per the format listed in Schedule 2):

i. Criteria mentioned above fulfilled,

ii. Innovative work applied for project operation,

iii. Creation of more full-time employment within the first incoming year,

iv. The scope of requirement of the proposed good/service in the market

v. Source of labor extrapolated for the proposed project,

vi. Source of raw materials used for the proposed project,

vii. Proposer’s educational qualification and experience in the relevant area,

viii. Possible expansion and regeneration of the proposed project,

ix. Predicted growth or decline of the good or services proposed by the project,

x. Availability of infrastructure at the proposed site,

xi. Feasibility of implementing the proposed idea,

xii. Risk analysis and management,

xiii. Discussions in relation to the proposed project.

13. How will the evaluation take place and what are the details?

 In conducting the evaluation of the proposed project, the proposer themselves may be present in person or virtually. The evaluation process of the project proposal will be as follows:

a. The report of the evaluated project, along with the received amount submitted to the subcommittee will be submitted by the subcommittee to the Executive Committee,

b. In accordance with the received report, the Executive Committee will then prepare an integrated assessment report, selecting the best project proposal to be recommended,

c. Although the requested loan concession amount shall be no more than NPR 25 million (NPR 25 lakhs), where it is found that the amount required for the operation of the proposed project is less than the amount requested for the loan concession, with base and reasoning, such will be mentioned, and the proposer will be subject to a loan lesser than the amount requested,

d. Within 30 days of the submission of the proposed project, the request will be evaluated, selected and recommended for the loan concession,

e. Details of the project will be published by the DOI on their website, along with the accepted budget, giving priority to the parameters,

f. The DOI must write to the NRB regarding the selected proposer who is to receive the loan concession, and inform the proposer of such as well,

g. Accordingly, the NRB must immediately inform the bank granting the loan concession of the recommendation, along with the explanation, in order to make the sum available,

h. The selected proposer must then contact the relevant bank regarding their selection for the loan concession, if not, the proposed project will automatically cancel,

i. Where the proposal has been cancelled, other chosen high scoring projects, according to the integrated assessment report will respectively be recommended.

14. What are the complaint arrangements available to each of the parties?

Following are the Procedure for complaint arrangement available to each of the parties:

a. According to this procedure, if there are any reasonably reasons for not disbursing the loan from the bank on the basis of the recommendation of the committee, the concerned bank should disclose the reason for the same and inform the concerned entrepreneur.

b. If the bank does not disburse the loan, such entrepreneur may file a written complaint to the committee.

c. If any complaint is received, the committee may give necessary directions to the bank to investigate and address such complaint within fifteen days from the date of receipt of the complaint.

d. It is the duty of the bank to comply with the instructions received.

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