The restoration of mul­tiparty democracy in 1991, has inaugurated a new era of free press and its development. One of the characteristics of the present situation is that media operation has so far been highly centralized only in and around Katmandu. The reason for this lopsided situation has been the paucity of resources and scopes available outside Kathmandu Valley. Even now they are facing same difficul­ties. Lack of modern printing plants, trained manpower, un­developed advertisement mar­ket and sales opportunities continue to inhibit enterprises. Performance of bank loans as a catalyst for development in this sector also has been con­strained by this situation.
Media Development Fund was conceived primarily to remedy this situation by providing support to small media operations, particularly outside Kathmandu which will, in its turn further strengthen democracy at the grass-roots.
A revolving Media Development fund was, thus, established under the aegis of Nepal Press Council with re­sources made available by the Danish Government. MDF is a self-governing fund established under the provision of the Press Council Act.

The principal objective of the Media Development Fund is to support the consoli­dation of democracy in Nepal by strengthening free and in­dependent media.
The immediate objective of the Fund is to reduce the burden with interest subsidy for loans to be granted to publishers of small newspapers on its recommendation. The Fund will make it easier for small-scale enterprises to pro­cure loans.
It aims at facilitating im­provement of the quality of the newspapers technically as well as professionally so that they may be enabled to increase their circulation's and income from advertising and thus be able to fruitfully participate in the overall democratic process.

Small enterprises which are professionally involved in the media sector are eligible to apply for the loans. Priority will be given to the media op­erating outside Kathmandu Valley.
Loans can be given to existing as well as new media enterprises which fall under the criteria developed by the managing board.

The purpose of the Media Development Fund is to provide guarantees for the bank loans given to small me­dia enterprises, preferably outside Kathmandu Valley.
The bank guarantee for the loans is based on normal market-oriented principles.

The Media Development Fund reduces the burden of prevalent rate of bank interest on loans by making available partial subsidies.

The Media Development Fund will work in close asso­ciation with Himalayan Bank which will handle the loan transaction.

A duly filled-out loan request form should be submit­ted to the MDF secretariat. The applicant should clearly men­tion intended amount and pe­riod of the proposed loan. The applicant should also submit:

Photocopy of company registration, tax clearance, memorandum of Article and Board Resolution,

Detailed description of the company mentioning the paid-up capital, list of employ­ees and market conditions, etc.

Financial situation of the company indicating profit, if any.

Document to verify the experience and qualification of the entrepreneur / publisher

Collateral against the proposed loan and its approxi­mate value.

The applicants must be those who are involved in either the print or the electronic media in the private sector.

The applicant must have a minimum of 5 years of work experience in the mass media. Bio-data of the applicant should be submitted.

In the case of newspapers, they should be in regular publication.

A proposal explaining the intended investment with detailed plans including expected earnings and expenses should be submitted to the secretariat.

The revolving core fund of the MDF is Rs. 10 million. There will be two types of loans: SHORT-TERM and LONG-TERM.

SHORT-TERM LOANS : Will be for an amount not exceeding Rs. 300,000 per loan and the repayment period will be 3 years. Short-term loan can be used for loans to invest in computers, photocopy machines, fax machines, etc.

LONG-TERM LOANS : Will be for amount not exceeding Rs.1000,000 or 10 percent of the core capital of the Fund. Repayment should be made within 6 years. Long-term Loan can be used for loans to finance more expen­sive and advanced printing ma­chines or other innovative ap­proaches to develop the mass media.

The Fund grants a subsidy to reduce the burden of the interest on the guaranteed bank loan.

The borrower must supply the bank & MDF with all important and required in­formation. A report should be submitted to the fund secre­tariat quarterly.

The MDF & Bank may visit concerned premises and inspect the assets acquired through the MDF loan.

The expenses incurred for processing and obtaining the loan must be borne by the borrower.

Interest and installment of principal should be paid on a quarterly basis. However, it is not necessary to pay the in­stalments of principal for the first year of the loan agree­ment.

The bank will consider a loan as defaulted if the bor­rower fails to pay interest and / or principal instalments for two consecutive periods. The bank will inform the MDF & the borrower in writing in the event of a default.

Necessary auditing will be carried out by the MDF & the Bank.

1. The borrower has to fill out an application form provided by the MDF secretariat.

2. The application should be sent to the MDF secretariat at the Press Council, Kathmandu. Applications can also be submitted through the Media Resource Centers of Nepal Press Institute at Biratnagar, Nepalgunj and district unit of Nepal Journalist Associa-tion.

3. The secretariat will scrutinize the applications. An evaluation of the proposed investment, and its economic viability from the point of view of profitability and liquidity available to pay interest and principal will be carried out by the secretariat.

4. The secretariat may visit project sites to assess viability and market prospects. If requested the secretariat will also provide consultations in matters like preparation of the loan proposal, budgeting and other procedural questions.

5. If and when the secretariat decides positively, it will present the applications to the Board of Directors of MDF for final decision.

6. The secretariat will inform the bank about the decision taken by the board.

7. The bank negotiates the loan with the applicant according to its terms and conditions. The bank will conduct all administration and moni-toring functions related to the loans.

8. The loan is supported by the core capital.

According to the by-laws of the Press Council Media Development Fund, the Board of Directors comprises the following:

1. The Chairman of Press Council: Chairman

2. President of Nepal Journalist Association: Member

3. Member Secretary of Press Council : Member

4. Representative of the Nepal Press Institute: Member

5. Representative of the Himalayan Bank: Member

6. Chief Administrative Officer of the Press Council or person designated by Press Council: Member-Secretary

MDF Secretariat headed by the member-secretary will execute all the decisions made by the Board of Directors and will work closely with the applicants and the Bank to make the loan process quick and efficient.