Kathmandu. Nepal Rastra Bank (NRB) has issued a statement for the current fiscal year 2082. The directive has been issued to implement the provision brought through the first quarterly review of the Monetary Policy of 83 BS.
KATHMANDU: The central bank has directed banks and financial institutions (including microfinance) to implement the provisions of the Monetary Policy by amending the unified directives issued to them. Now, banks and financial institutions will have to carry out financial transactions as per this directive.
The review has made a provision that banks and financial institutions can restructure or reschedule the loans issued to enterprises and businesses in Ilam and other districts affected by the recent floods and landslides by charging a minimum of 10 percent interest.
Similarly, the central bank has scrapped the existing provision of reducing the interest rate of institutional fixed deposits by at least 1 percentage point compared to the interest rate of individual fixed deposits.
Similarly, the upper limit of the interest rate corridor and the policy rate have been reduced through the monetary review. The Nepal Rastra Bank (NRB) has reduced the permanent liquidity facility rate from 6 percent to 5.75 percent and the policy rate from 4.50 percent to 4.25 percent. The lower limit of the interest rate corridor has remained unchanged at 2.75 percent. Through the review, the existing provision regarding mandatory cash reserve and legal liquidity ratio has been retained.
Similarly, the existing limit of personal overdraft loans provided by banks and financial institutions is Rs. From Rs. 50 lakhs to Rs. It has been set at Rs 1 crore. However, the amended directive has made provision for the banks and financial institutions to maintain a provision of hundred percent loan loss in the amount exceeding the specified limit.
Similarly, the review directive has increased the maximum limit of loan that microfinance institutions can disburse to Rs 1.5 million. Earlier, microfinance institutions were allowed to issue loans up to Rs 7 lakh. Arrangements have been made to modify the loan repayment schedule keeping in mind the problems faced by the borrowers who have received loans from microfinance financial institutions.
