Banking News – The Confederation of Banks and Financial Institutions Nepal (CBFIN) has welcomed the Nepal Rastra Bank’s Monetary Policy for Fiscal Year 2083/84, describing it as a balanced policy that promotes price stability, financial sector resilience, regulatory simplification, and overall economic stability.

In a statement, CBFIN said the central bank has moved beyond its traditional policy framework by introducing measures that send a positive signal to both the financial system and the private sector while maintaining a balanced monetary policy approach.

The confederation particularly welcomed provisions aimed at managing non-performing loans (NPLs) in distressed industries, supporting the revival of stressed credit, and maintaining policy stability by keeping key monetary policy rates unchanged. These include the policy rate, standing deposit facility rate, bank rate, cash reserve ratio (CRR), statutory liquidity ratio (SLR), and standing liquidity facility (SLF).

CBFIN also described several policy initiatives as forward-looking, including plans to make the process of opening and closing bank branches more flexible, promote digital banking to reduce operating costs, encourage commercial banks to invest in foreign government securities to improve liquidity management through foreign exchange purchases, and implement sterilized intervention during foreign currency purchases.

While expressing overall satisfaction with the monetary policy, CBFIN noted that several recommendations it had submitted during the policy formulation process were not incorporated. These include proposals related to risk-based loan loss provisioning, provisioning based on total exposure for secured loans, regulatory easing on capital adequacy requirements, and prudential regulatory reforms aligned with international best practices.

The confederation, however, expressed confidence that Nepal Rastra Bank will review these recommendations and address them through its upcoming Unified Directives, particularly in light of the current economic environment, rising capital pressure on banks, the management of non-performing loans, and the need to improve credit flow to the private sector to support the government’s economic growth objectives.

CBFIN reaffirmed its commitment to maintaining constructive dialogue and cooperation with Nepal Rastra Bank and the Government of Nepal to ensure the effective implementation of the monetary policy. The confederation said it remains committed to providing policy recommendations that will strengthen financial stability, enhance the competitiveness and resilience of Nepal’s banking sector, accelerate private sector recovery, and support overall economic growth.