Governor Maha Prasad Adhikari of Nepal Rastra Bank (NRB) has announced the monetary policy for FY 2081/82.
Key Highlights:
- Share Collateral Loans:
- The cap on share collateral loans for institutional investors, previously set at Rs. 20 crore, has been removed. This change aims to improve the efficiency of margin trading. The cap remains for individual investors.
- Loan Provisioning:
- The provisioning requirement for performing loans has been reduced from 1.20% to 1.10%, which is expected to enhance bank profitability.
- Microfinance Mergers:
- The policy prioritizes the merger and acquisition of microfinance institutions to improve stability and efficiency.
- Customer Protection:
- New regulatory measures to protect microfinance customers, including addressing complaints and revising interest rate frameworks. Microfinance institutions can charge up to 15% interest on loans and provisions are made for restructuring loans due to unforeseen circumstances.
- Policy Rates:
- The policy rate has been reduced from 5.5% to 5%, and another key rate from 7.5% to 7%. The lower limit deposit collection rate remains unchanged.
- Credit Expansion:
- The target for credit expansion has been increased to 12.5% from last year’s 11.5%.
- Real Estate and High-Value Loans:
- Risk burden for real estate, high-value vehicles, and share mortgages up to Rs. 5 million has been reduced, along with easing the loan loss system for good loans.
- Private Equity and Venture Capital:
- Institutions funded by private equity and venture capital will not be blacklisted even if their investments face issues, to promote investment and provide greater security.
This policy aims to address capital market challenges and promote financial stability and growth in the banking sector.
