Kathmandu. The Nepal Rastra Bank (NRB), the central bank in its half-yearly review of the monetary policy for the fiscal year 2082/83, has maintained the existing provisions related to interest rate corridor, bank rate, mandatory cash reserve and statutory liquidity ratio.
Through the review, the central bank has forwarded a policy to expand the flow of credit to the productive sector. Under this, the scope of sectoral credit limit applicable to agriculture, energy and micro, domestic and small enterprises will be expanded to include tourism, information technology and export-oriented industries based on domestic raw materials.
Likewise, the provision regarding minimum credit ratio that banks and financial institutions are required to maintain in every priority sector will be amended. The guidelines on current capital loans will also be amended. As per the new provision, banks and financial institutions will be able to determine the loan period on the basis of the analysis of the borrower’s cash flow and financial statements.
Similarly, the government will also have to amend the provision requiring the borrowers to pay less than 10 per cent of the arrears of working capital loan for at least seven consecutive days in a year and maintain it below 30 per cent. In order to provide relief to the enterprises and businesses displaced by the expansion of Mahendra Highway and Mid-Hill Highway, a provision has been made to restructure or reschedule the loans issued in such areas by charging a minimum of 10 percent interest.
The limit of primary capital has been increased from 25 percent to 30 percent for non-deliverable forward transactions carried out by banks and financial institutions under the foreign exchange risk management. Similarly, foreign investment will be facilitated in infrastructure development such as data center, cloud computing, robotics lab and artificial intelligence, and loan flow will be encouraged through consortium in such projects.
A strategy has been adopted to gradually reduce transactions through cheques to promote the electronic payment system. Accordingly, the provision of blacklisting the borrowers who fail to repay the loan due to circumstantial reasons would not be kept in the blacklist and if the process of paying the arrears with valid reasons was initiated, the provision would be effectively implemented for removing them from the blacklist for a maximum of 6 months.
The central bank-related programmes outlined in the recently approved Second Financial Sector Development Strategy (2082/83-2086/870) will be implemented in a phased manner.
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