Money & Finance
The Nepal Rastra Bank's Board of Directors is meeting on Friday morning for a half-yearly review of monetary policy.
A high-ranking NRB official said the board was preparing to review the monetary policy on Friday. "Plans are afoot to bring it on Friday. If that doesn't work out, it will come on Sunday," the official said.
For the monetary policy review, the central bank had asked for suggestions from the public until January 20. After considering everyone's feedback, the NRB is convening to discuss the current state of monetary policy.
Businessmen have suggested that the policy be designed to facilitate liquidity and reduce high-interest rates. They have called for interest rates to be cut to relieve pressure on business owners.
On the other hand, stock traders have demanded that the limit on marginal lending be increased from Rs 120 million to reduce the risk burden. The NRB is open to those suggestions, according to sources said.
"In light of the current status of the stock market and the improvement in the banks' liquidity, preparations are on to adopt flexibility in the Rs120 million limit for institutional investors. The financial evaluation will handle any problems," an NRB source said.
Due to the current strategy, even investment firms with enormous capital could not obtain loans over Rs120 million. Consequently, investment firms could not generate secondary market demand. The lifting of the loan ceiling for institutional investors is expected to stimulate demand in the capital market.
A few days ago, NRB Governor Mahaprasad Adhikari hinted at loosening restrictions imposed by policy decisions made during a difficult period in light of the improving economic outlook. As a result, the central bank is expected to adopt a more dovish stance in its second-quarter review this time.
