Major Highlights: First Quarterly Review of Monetary Policy

Nepal Rastra Bank has made public the first quarterly review of the monetary policy for the Fiscal Year 2078/79.

NRB made public the first quarterly review on Friday morning.

The provision for share loans has not changed in the first quarterly review. Nepal Rastra Bank (NRB) had introduced a 4/12 share loan structure in the current fiscal year through monetary policy. According to this, a bank cannot forward more than Rs. 4 crores of margin loans to an individual, and no individual can have more than Rs. 12 crores worth of margin loan in total from the financial institutions.

Similarly, NRB has not changed the provision of the loan to deposit ratio. However, it seems that Nepal Rastra Bank (NRB) has given the flexibility to banks and financial institutions on the loan-to-deposit ratio. Now, the action plan to be maintained within the stipulated limits by Ashar 2079 BS can be approved and implemented by the respective Board of Directors of the banks themselves.

In view of the existing situation of foreign exchange reserves, it has been made mandatory to keep cash margin while opening import letters of credit for the specified items.

As per the review, arrangements will be made for commercial banks to issue bank guarantees if Nepali firms and companies related to commercial agriculture, manufacturing industry, infrastructure construction, and tourism want to take institutional loans from abroad.

The existing arrangements including interest rates and fees for foreign currency loans will be reviewed. Arrangements will be made to collect foreign currency deposits from non-resident Nepalis and foreign institutions involving non-resident Nepalis. Meanwhile, the existing limit on non-deliverable forward trading of foreign currency will be reviewed.

According to the review, loans will be provided for the construction of hospitals at the local level where there are no hospitals. In order to build a 100-bed hospital at the local level where there is no hospital, an arrangement has been made to give a loan of up to Rs 20 crores by adding a 2 percentage point premium to the base rate. Earlier, the monetary policy had made provision for easy disbursement of loans from banks and financial institutions for the construction of 100-bed hospitals at the local level without hospitals.