Kathmandu, May 9: Nepal Rastra Bank (NRB) has instructed banks and financial institutions to change the interest rate of loans every month. Previously, there was a rule that the loan interest rate had to be changed every three months, but now the financial institutions can change interest rate every month.
The central bank has amended the Integrated Instruction, 2079 BS issued to banks and financial institutions of categories A, B and C, and has now instructed them to publish the monthly and average base rate of the last three months on their website as well.
In addition, when disbursing a loan, it cannot be disbursed at an interest rate lower than the average base rate of last three months. Also, the premium should be based on the base rate.
When changing the interest rate of the loan, it will have to be changed monthly up to the limit of the increase or decrease in the average base rate of the last three months. However, this system will not prevent interest rate reduction by more than the average base rate change of the last three months, not to increase the interest rate under any circumstances and to maintain a fixed interest rate in agreement with the borrower.
In this way, when there is a change in the average base rate of the last three months, the borrower should be clearly mentioned in the offer letter and given mandatory information regarding the change in the interest rate.
When the variable interest rate is linked to the base rate, a system must be arranged to automatically change the interest rate according to the change in the average base rate of the last three months through the core banking system of the licensed institution.
Also, if the interest rate is reduced or not increased, arrangements should be made so that all the customers get the facilities equally.
