The Nepal Rastra Bank (NRB) Governor, Maha Prasad Adhikari, has released the first monetary policy for the current fiscal year 2081–82.
The following are the monetary policy's salient features:
The NRB eliminated the institutional investors' maximum ceiling on loans
secured by shares. This action was declared by Governor Adhikari on Friday
during the monetary policy announcement. The previous cap of Rs. 20 cr has been lifted. It was imposed because
institutional investors found margin trading to be inefficient. The cap has
been kept in place for individual investors, nevertheless, by the central bank.
According to the monetary policy,
"Nepal Rastra Bank has approved 34 securities broker companies so far in
order to promote the concept of margin trading and gradually reduce direct
lending investments from banks and financial institutions in the securities
market." The current cap of Rs. 20 crores on margin-type share collateral
loans given by banks and financial institutions to institutional investors
would be eliminated due to the present inefficiencies in margin trading."
Additionally, the NRB lowered the need for provisioning on performing loans
from 1.20 percent to 1.10 percent. It is anticipated that banks will become
more profitable as a result of this provisioning cut.
The NRB has made microfinance
mergers a priority in its monetary policy. mergers and acquisitions involving
financial companies that provide microloans, according to the NRB.
In response to worries about microfinance institutions, the NRB has made
consumer protection its top priority by following global best practices. The
policy handles grievances pertaining to microfinance services and incorporates
regulatory safeguards to safeguard consumer interests.
A modern evaluation of the regulatory framework pertaining to interest rates
and service costs levied by microfinance institutions is mentioned in the
policy. At the moment, the highest interest rate that these institutions can
charge on loans is 15%.
Additionally, plans will be put in place to enable microfinance clients who,
for whatever reason, are unable to repay their loans to restructure them in
exchange for a portion of the interest.
In addition, the policy rates have been lowered by the
central bank. One important policy rate was cut from 7.5 percent to 7 percent,
and the policy rate was cut from 5.5 percent to 5 percent. There has been no
change in the lower limit deposit collecting rate.
The goal for credit expansion has been raised by the NRB from 11.5 percent to
12.5 percent for the current fiscal year.
In addition to addressing the issues facing the capital market, this monetary
policy seeks to advance financial stability and the expansion of the banking
industry.
For the fiscal year 2081/82 BS, the
NRB has eased the loan loss system for good loans and reduced the risk burden
for share mortgages up to Rs 5 million, real estate, and high-value cars.
In an effort to encourage investment and offer more security, NRB will not
place institutions supported by venture capital and private equity on a
blacklist, even if their investments have problems.
