Why and Under What Circumstances Is the Variance Provision Applied?

The financial regulatory authority has established a variance provision to enforce realistic financial forecasting by credit applicants. This rule mandates that the provision applies exclusively when a borrower's projected transaction amount during credit limit assessment deviates by more than 20 percent below the figures in the official audit report. The requirement ensures accurate risk evaluation and triggers specific compliance measures whenever projected revenues significantly underperform verified data.

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The Variance provision has been implemented to make the projected financial statements submitted by the borrower realistic. This provision is applied only when the transaction amount in the projected statement submitted by the borrower during credit limit determination is more than 20 percent lower than the transaction amount reported in the audit report.

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Source: Nepal Rastra Bank — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works