The directive issued on Wednesday states that all commercial banks and financial institutions should allocate 0.25 percent of the amount by mid-April and deposit it in a separate account opened in the name of YSEP.
Similarly, financial institutions including commercial banks have been directed to deposit half the amount by mid-July and the remaining amount by mid-January 2010.
As per the existing arrangement, commercial banks are required to allocate three percent of their total lending under the Deprived Sector Loan (DSL) program to finance loans of up to Rs 30,000, mainly in the agricultural sector and at a concession lending rate averaging 5 percent per annum.
Likewise, financial institutions categorized under class B have to allocate 1.5 percent of their total lending under DSL while finance companies categorized as class C are required to allocate 1 percent of total lending.
As per the policy the government is likely to mobilize over four billion rupees under the program for which it has already earmarked Rs 500 million in the current fiscal year budget.
The Ministry of Finance, the main implementing agency for the program, is accepting applications from youths interested in participating in the program that aims to provide collateral-free loans of up to Rs 200,000 for starting self-run small businesses. According to reports, some 400,000 unemployed youths have already applied.
Nepal has a total 235 financial institutions of which 26 are banks, 58 are development banks and 78 finance companies.
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