It was highly speculated in the investors' community that Nepal Rastra Bank would revise its margin loan provision. Any revision on the margin loan arrangement has the potential to affect the trend of the Nepalese stock market. Furthermore, rumors had spread fast that the central bank would add restrictions on commercial banks and development banks to invest in shares of microfinance companies.
Nepal Rastra Bank has unveiled its semi-annual review of the monetary policy. It seems that no such revision has been made.
In the review document, it has been stated that the overall economic and financial indicators have reflected an encouraging summary of the country's economy. Inflation is under control while the Balance of Payments is conserved. The International Monetary Fund has also projected that the effects of the Covid-19 pandemic aren't as bad as previously speculated in neighbouring countries India and China. Since the Nepalese economy is closely intertwined with these two big economies, the signals look positive for Nepal too.
Peculiarly, foreign Parent companies and Group of companies of Nepalese companies that have investments in Nepal can now take loans of up to 60% of the value of their investment.
In order to provide comfort to the hardship created by the pandemic, the central bank has added the following provisions:
a) For continued loans till Poush 2076, in case they are now unable to pay the interest because of the pandemic, lenders may provide loan restructuring and rescheduling facilities to the borrowers by taking only 5% of the interest amount for now.
b) Special refinancing facilities will be provided to hydropower companies with production less than 10 MW.
c) QR code and digital payment will be further encouraged. For this, the expenses incurred to impart financial literacy will be chalked up under CSR expenses.
d) The monetary limit of imports under the DAP and DAA provision will be revised.
The original document reviewing the national economic conditions review, banking sector review, liquidity condition, and international review is attached herewith: