Money & Finance
The Nepal Rastra Bank has adopted some flexibility for borrowers in its second-quarter review of the monetary policy for the fiscal year 2079/80. The central bank made public a review report on its website on Friday.
The NRB has mandated that the BFIs cannot charge penal interest on loans disbursed until Asadh 2080 (mid-July 2023) if the borrower repays the principal and interest one month after the due date.
It has also arranged for the restructuring and rescheduling of active loans up to Rs20 million that remain active as of mid-January 2023 until mid-July 2023 after examining the cash flow and income of the industrial business.
As soon as non-performing loans under the loan classification and loss system are regularised, the NRB report says, they will be classified in the good and micro-monitoring categories in accordance with international best practices to bolster the credit ratings of banks and financial institutions.
“Banks and other financial institutions will be able to keep a close eye on the average interest rate gap between loans and deposits and the premium charged to borrowers,” it says.
The central bank has maintained its policy rates at their current levels. The overnight liquidity facility has been decreased from 8.5 per cent to 7 per cent.
"It is trying to facilitate small businesses by giving concessions which a good thing," noted President of Nepal Bankers’ Association Sunil KC. However, with no major revisions, the second quarter report indicates the central bank’s “wait and see” policy, he said.
On the other hand, the NRB's second quarterly policy review did not say anything about real estate or stocks.
Contrary to prior claims that the central bank would be flexible towards marginal lending, it has made no adjustments to any regulations governing the stock market.
Hopes were high in the country’s capital market after Finance Minister Bishnu Paudel instructed Governor Maha Prasad Adhikari to refrain from making any policy decisions to affect investor sentiments.
The central bank has said some issues, including share loans, will be addressed through separate circulars.
“There appears to be a misunderstanding that the NRB was revising its monetary policy for share investors,” a high-ranking central bank official said. "That's not true."
The NRB board also discussed issues related to the capital market and real estate, the official added. “We'll announce decisions on shares through a separate circular.”
Full text of the second quarterly monetary policy review:
