Banks no longer can force their borrower to take insurance policies from company of their choice; Liquidity coverage ratio and Counter cyclical buffer to be implemented

The Monetary Policy of 2076/77 has tapped into an exposed nerve of the borrowers and has applied band-aid on it. Previously, banks use to dictate the terms of insurance of property used as collateral by the borrowers. This has restricted the freedom of borrower to independently choose the insurance policy and the company based on their decision factors.

However, now the tables have turned. As mandated by NRB's monetary policy, the borrowers have the full autonomy to choose the type of policy and the insurance company while insuring the property/asset they are using as collateral. In addition to that, the banks can't force the borrowers to buy insurance policies that aren't directly related to the nature of loan.

Likewise, NRB will also be implementing Counter cyclical buffer and liquidity coverage ratio.