NRB bid to revive the markets
KATHMANDU, JUL 13 -
Giving much needed relief to banks and financial institutions (BFIs), estate sector and stock market, the central bank on Tuesday decided to increase the home loan ceiling, allow BFIs to reschedule realty lending for one more year and relax margin lending.
With this decision, BFIs can renew their realty loans for next one year (mid-July 2012) if the loanee pays all outstanding interests for the current fiscal year. This is expected to help BFIs maintain good profits as they have to make provisioning of just one percent of the loan amount.
“This provision will also help BFIs recover at least all outstanding interests,” said Bhaskarmani Gyawali, spokesperson for the Nepal Rastra Bank (NRB).
The central bank also raised the home loan ceiling, excluding personal home loans up to Rs 8 million from the real estate loans category. Earlier, home loans above Rs 6 million were categorised under realty loans. “This will help BFIs reduce their exposure to the realty sector,” said Gyawali.
Bankers had been demanding that home loans up to Rs 10 million not be categorised under realty loans. BFIs have lent more than Rs 100 billion in the the realty sector. Alarmed by BFIs aggressive lending to the realty sector, NRB had imposed a cap on realty lending about one-and-a-half years ago, asking BFIs to limit their realty lending to 25 percent of their total lending.
With some financial institutions landing in trouble as a result of realty loan defaults, the central bank was under pressure to come up with fresh relief measures.
In the wake of a slowdown in the realty business, bankers had been saying that difficulties in recovering realty loans would result in a rise in non-performing loans hitting their earnings.
NRB’s latest decisions are in line with the recommendations of the High-level Financial Sector Coordination Committee. The panel has advised NRB to relax its stringent policies on the real estate lending.
In a bid to revive the stock market, the central bank board has also decided to remove the ceiling on margin loans (loans against shares as collateral). Currently, BFIs can lend up to 60 percent of average market value of shares put up as collateral.
“Now, BFIs can decide themselves about the margin loan amount,” said Gyawali.
The NRB measures have pleased the banking fraternity. “The central bank has made the right move,” said Ashoke Rana, president of Nepal Bankers’ Association. “This will help keep our balance sheets good as we are not required to make extra provisioning,” he said.
Home loan ceiling increased
BFIs allowed to renew realty loans
Margin lending relaxed
Source: Kantipur
Giving much needed relief to banks and financial institutions (BFIs), estate sector and stock market, the central bank on Tuesday decided to increase the home loan ceiling, allow BFIs to reschedule realty lending for one more year and relax margin lending.
With this decision, BFIs can renew their realty loans for next one year (mid-July 2012) if the loanee pays all outstanding interests for the current fiscal year. This is expected to help BFIs maintain good profits as they have to make provisioning of just one percent of the loan amount.
“This provision will also help BFIs recover at least all outstanding interests,” said Bhaskarmani Gyawali, spokesperson for the Nepal Rastra Bank (NRB).
The central bank also raised the home loan ceiling, excluding personal home loans up to Rs 8 million from the real estate loans category. Earlier, home loans above Rs 6 million were categorised under realty loans. “This will help BFIs reduce their exposure to the realty sector,” said Gyawali.
Bankers had been demanding that home loans up to Rs 10 million not be categorised under realty loans. BFIs have lent more than Rs 100 billion in the the realty sector. Alarmed by BFIs aggressive lending to the realty sector, NRB had imposed a cap on realty lending about one-and-a-half years ago, asking BFIs to limit their realty lending to 25 percent of their total lending.
With some financial institutions landing in trouble as a result of realty loan defaults, the central bank was under pressure to come up with fresh relief measures.
In the wake of a slowdown in the realty business, bankers had been saying that difficulties in recovering realty loans would result in a rise in non-performing loans hitting their earnings.
NRB’s latest decisions are in line with the recommendations of the High-level Financial Sector Coordination Committee. The panel has advised NRB to relax its stringent policies on the real estate lending.
In a bid to revive the stock market, the central bank board has also decided to remove the ceiling on margin loans (loans against shares as collateral). Currently, BFIs can lend up to 60 percent of average market value of shares put up as collateral.
“Now, BFIs can decide themselves about the margin loan amount,” said Gyawali.
The NRB measures have pleased the banking fraternity. “The central bank has made the right move,” said Ashoke Rana, president of Nepal Bankers’ Association. “This will help keep our balance sheets good as we are not required to make extra provisioning,” he said.
Home loan ceiling increased
BFIs allowed to renew realty loans
Margin lending relaxed
Source: Kantipur
