In a media briefing held this afternoon, the Nepal Rastra Bank (NRB) announced the commencement of the first quarterly review of the monetary policy for the fiscal year 2080/81. The event, presided over by NRB Governor Maha Prasad Adhikari, took place at the Kathmandu Marriott Hotel, Naxal, starting at 2:00 pm.
Governor Adhikari, in his address, highlighted key revisions outlined in the first quarterly review of the monetary policy, which had been released earlier in the day. Notable changes include a reduction in the bank rate from 7.5% to 7%, a decrease in the policy rate from 6.5% to 5.5%, and the maintenance of the deposit collection rate at 3.0%.
Furthermore, Governor Adhikari emphasized the necessity to take recovery actions against borrowers facing challenges in repaying loans to microfinance institutions. In an effort to address concerns in the real estate sector, the risk weight of all types of real estate held by banks and financial institutions has been lowered. Additionally, the risk associated with share mortgage loans exceeding Rs. 50 lakh has been reduced to 125%.
In a strategic move, the NRB has adjusted the treatment of debentures issued by Banks and Financial Institutions (BFIs). Until Poush 2080, these debentures will be considered 100% as resources. Subsequently, from Poush 2080 to Ashad 2081, the recognition will be reduced to 50%. This gradual shift in the treatment of debentures is deemed essential due to their significant size, amounting to approximately Rs. 1 Kharba. The cautious approach aims to avoid abrupt impacts on deposit collection, acknowledging the importance of a smooth transition.
The Governor emphasized that this comprehensive review and its associated policy adjustments are crafted to maintain a balanced economic environment, promote financial stability, and address challenges faced by various sectors in the country.
Central Bank Unveils First Quarterly Monetary Policy Reforms: Highlights of Key Changes in Banking Sector