Kathmandu, July 26 : The Nepal Rastra Bank (NRB) has unveiled its monetary policy for the fiscal year 2080/81. A significant highlight of the policy is the reduction of the policy rate by 1 percentage point, bringing it down to 6% from the previous 7%. This reduction aims to lower the cost of funds for banks through the central bank’s refinancing facility.

The policy also indicates the elimination of the cap on share debentures, potentially paving the way for loans totaling 25 million, although this topic is not explicitly detailed. Additionally, the NRB plans to conduct a study on the risk related to home security​.

These are the main points:

• The policy rate has been reduced by 6.5 percent, lowering the internal and external economic outlook from the previous 7.5 percent to 5.5 percent.
• To make the interest rate corridor effective, a system will be established to maintain the deposit collection rate at 7.5 percent while lowering the lending rate to 5.5 percent.
• The first housing loan limit will be increased from NPR 1 crore 50 lakhs to NPR 2 crores.
• Based on the suggestions of banks and financial institutions, there will be a reassessment of guidance in relation to margin loans.
• In the fiscal year 2080/81 budget of the Nepal government, there will be a reconsideration of the provision requiring borrowers who use loans/facilities more than a certain limit from banks and financial institutions to obtain a permanent account number.
• There will be a review of existing provisions regarding share collateral loans, real estate loans, and higher purchase loan-related risks.
• During the operation of consolidated businesses until Asar 2081, microfinance financial institutions will be encouraged for mergers and acquisitions.
• Nepali citizens traveling outside India will be provided foreign currency up to USD 1500 twice a year, and the existing provision will be revised to provide up to USD 2500.
• When the impact and effect of COVID-19 diminish, the existing provision for repaying loans taken in foreign currency in Nepalese Rupees will be removed.
• In the fiscal year 2080/81, an extended monetary distribution of 12.5 percent and a credit increase of up to 11.5 percent from banks and financial institutions to the private sector will be propelled.