Kathmandu, Dec 8: Nepal Rastra Bank, the central bank of Nepal, has released the first quarter review of monetary policy for the current financial year 2023/24. It was made public after today’s meeting of the Board of Directors of the Central Bank approved the review of the said policy.
In the review, the bank rate has been reduced from 7.5 percent to 7 percent in view of the analysis of various aspects affecting the current inflation, the Balance of Payment situation and the growth rate of bank loans going to the private sector.
Similarly, the fiscal policy rate has been reduced from 6.5 percent to 5.5 percent and the deposit collection rate has been reduced from 4.5 percent to 3 percent. Similarly, the mandatory cash ratio and statutory liquidity ratio have been kept intact.
Debentures issued by banks and financial institutions are allowed to count 100% as resources until the last date of Poush 2080 BS, after which 50% of the debentures can be counted as resources until Ashad 2081 BS.
Major highlights
1. The bank loan rate decreased from 7.5% to 7%, the policy interest rate from 6.5% to 5.5%, and the deposit collection policy rate maintained at 3.0%.
2. BFIs’ debentures are considered 100% as resources until Poush 2080BS, then 50% until Ashad 2081BS.
3. Private sector loans increased by 4.8%, lower than the previous year. Deposit growth was strong at 14.9%.
4. Banks used Rs. 239.49 Arba in liquidity from the central bank. Interbank transactions rose by 58.67%, indicating an easing liquidity situation.
5. Short-term and long-term interest rates decreased. The weighted average interest rate on 91-day treasury bills fell from 10.14% to 4.94%. The interbank transaction interest rate dropped from 8.51% to 2.26%.
6. Monthly installment income ratio for housing loans up to Rs. 50 lakh increased and maintained at 60%.
7. Borrowers in contact with microfinance institutions facing difficulties can restructure loans if applied by Chaitra 2080.
8. Government mobilized Rs. 106.790 Arba in three months—internal debt Rs. 97.31 Arba and external debt Rs. 9.48 Arba, accounting for 23.6% of the proposed budget for FY 2080/81.
9. The risk weight of real estate by banks and financial institutions and share mortgage loans of more than Rs.50 lakh reduced to 125%.
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10. Government expenditure increased by 0.9%, revenue mobilization by 5.0%. Total expenditure reached Rs. 280.57 Arba, 16.0% of the allocation.
Full Text
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