Nepal Rastra Bank Publishes First Monetary Policy Review for FY 2082/83; Cuts Key Interest Rates, Raises Loan Limits, and Supports Disaster-Affected Borrowers

Nepal Rastra Bank (NRB) has unveiled its first-quarter monetary policy review for the fiscal year 2082/83. The review includes adjustments to interest rates, lending limits, and policies to support borrowers affected by natural disasters. The central bank has also introduced measures to enhance governance, promote digital banking, and provide greater flexibility to financial institutions.

Key Highlights of the Monetary Policy Review:

1. Interest Rate Adjustments:
Standing Liquidity Facility Rate reduced from 6.00% to 5.75%.
Policy Rate reduced from 4.50% to 4.25%, keeping it symmetric within the interest rate corridor.
Standing Deposit Facility Rate remains at 2.75%.

2. Cash Reserve and Liquidity Requirements:
Existing requirements for Required Cash Reserves (CRR) and Statutory Liquidity Ratio (SLR) remain unchanged.

3. Fixed Deposit Rule Removed:
Banks and financial institutions no longer need to keep institutional fixed deposit rates at least 1% lower than personal fixed deposit rates.

4. Personal Overdraft (OD) Limit Increased:
Limit for individual overdraft loans increased from Rs. 50 lakh to Rs. 1 crore.

5. Microfinance Loan Limit Increased:
Maximum collateral-based loan from microfinance institutions increased from Rs. 7 lakh to Rs. 15 lakh.

6. Flexible Repayment for Microfinance Borrowers:
Borrowers facing repayment difficulties can have their loan schedules revised.

7. Support for Disaster-Affected Borrowers:
Borrowers in Ilam and other flood/landslide-affected districts can have loans restructured or rescheduled, with a minimum interest of 10% applied once.

8. Branch Consolidation in Metropolitan Areas:
Banks may adjust or consolidate branches to optimize operations in cities with significant branch presence and high digital transaction volumes.

9. Anti-Bribery and Corruption Policy:
Banks and financial institutions must implement Anti-Bribery and Corruption policies to strengthen transparency, accountability, and governance.