Monetary Policy released today; commercial banks paid up to be 8 billion, no change in CRR and SLR

ShareSansar, July 23:

Monetary policy for the new fiscal year 2072/73 has been announced by Governor Dr. Chiranjibi Nepal of Nepal Rastra bank (NRB) today at 2 PM at Hotel Radission, Kathmandu.

The new monetary policy has come up with many announcements which will send positive signal to the stock market.

As per the first monetary policy announced by Governor Dr. Chiranjibi Nepal at the jam-packed lobby of Hotel Radisson, the central bank has come up with a number of short- as well as long-term measures to mop up surplus liquidity in the capital market.

Monetary Policy 2072/73 has introduced a provision regarding increment in capital base to strengthen the banks and financial institutions of the country. As per     Monetary Policy 2072/73 Commercial Banks  need to  increase their capital to Rs 8 arba, National level  Development Bank to Rs 2.56 arba, Development Bank with  working area of  4-10 districts need to  increase their paid up to Rs 1.20 arba, Development Bank with working area of 1-3 districts to Rs 40 crore, National level Finance Companies or Finance Companies with working area of 4-10 districts must have a paid up capital of Rs 80 crore whereas Finance Companies with working area of 1-3 districts need to increase their paid of capital to 40 crore by the end of Fiscal Year 2073/74.

The provision has directly encouraged merger and acquisitions of BFI’s.

Monetary Policy has directed Bank and Financial Institutions (BFIs) to bring an increment of 0.5 percent in the compulsory deprive sector lending. NRB had increased the level of compulsory deprived sector lending to 5 percent, 4.5 percent and 4 percent of total loan portfolio for commercial banks, development bank and finance companies, respectively.

It was expected that to tackle with the expenses of the huge budget of fiscal year 2072/73 and also to deal with the current surplus liquidity situation of the banks, monitory policy 2072/23 is likely to bring an increment of 0.5 percent to 1 percent in Cash Reserve Ratio (CRR) but CRR remains the same i.e 6 percent for Commercial banks, 5 percent for Development banks, and 4 percent for Finance companies.

The Statutory Liquidity Ratio  (SLR) also remains the same of last FY 2071/72.

Summary of Monetary Policy: