Nepal Rastra Bank has announced the monetary policy for the current financial year 2079/080. The monetary policy has stipulated that different interest rates will be maintained for the productive and commercial sectors. According to the new arrangement, the National Bank has raised the bank rate to 8.5 percent. Earlier such interest rate was 7 percent. This will increase the overall interest rate.
The interest rate (bank rate) to be paid by banks and financial institutions while taking loans from the National Bank has been increased.
Nepal Rastra Bank has removed the limit of 4 crore imposed on share loans. Earlier, the limit was Rs 4 crore from one bank and financial institution and Rs 12 crore from all banks and financial institutions. In the said system, after removing the limit of 4 crore, the National Bank has continued the system of taking only up to 12 crore rupees from all banks and financial institutions.
Highlights of Monetary Policy 2079/80:
- The rates under the interest rate corridor have been increased by 1.5 percentage points and the bank rate has been maintained at 8.5 percent, the policy rate at 7.0 percent, and the deposit collection rate at 5.5 percent.
- The mandatory cash ratio to be maintained by banks and financial institutions will be increased by 1 percentage point to 4 percent with effect from Bhadra 1, 2079.
- By the end of 2079 Poush, the statutory liquidity ratio to be maintained by banks and financial institutions will be increased to 12 percent for commercial banks and 10 percent for development banks and finance companies.
- Only if commercial banks and microfinance financial institutions merge within their own categories or conduct integrated transactions by the end of 2079 Poush, the discounts and facilities related to mergers and acquisitions provided by this bank will be available.
- The principal and interest of the loans to be paid by the end of 2079 Ashad by enterprise businesses that have used loans up to a maximum of 50 million from banks and financial institutions; If the payment is made by the end of 2079 Ashoj, it will be arranged that penal interest will not be charged.
- There will be a difference in the interest rate of loans going to productive and commercial sectors. At present, banks and financial institutions will be allowed to determine the interest rate by adding a maximum of 2 percentage points to the base rate when providing loans up to 20 million for food production, livestock, fisheries, export and manufacturing industries based on 100 percent foreign raw materials.
- When granting loans to the private sector for the construction of information technology and industrial parks, an arrangement will be made to determine the interest rate by adding a maximum of 2 percentage points to the base rate.
- A maximum limit of Rs. 120 million will be maintained so that a single customer limit of margin loans can be taken from one or all licensed financial institutions. After becoming regular and organized through stock brokers, such margin loan arrangements will be removed.
- The risk weighting of loans flowing through share securities is maintained at 100 percent for loans up to 25 lakh rupees and 150 percent for loans above that.
- Loans to the productive sectors including agriculture, small enterprises, exports, and those affected by the Covid-19 epidemic will continue to be refinanced. The Refinance Facility will be gradually reduced and made available by the end of 2081 Ashad so that the balance of the related fund is equal.
