Nepal Rastra Bank has reduced the upper limit of the interest rate corridor and key policy rate while maintaining the lower limit, introducing several regulatory adjustments for banks and financial institutions.
Nepal Rastra Bank (NRB) has released the first quarterly review of the Monetary Policy for FY 2082/83. As part of the review, the upper limit of the interest rate corridor, represented by the Standing Liquidity Facility (SLF) rate, has been reduced from 6% to 5.75%, while the key policy rate has been lowered from 4.5% to 4.25%. The lower limit of the interest rate corridor, the Standing Deposit Facility (SDF) rate, remains unchanged.
The key revisions include:
- The SLF rate, representing the corridor’s upper limit, has been reduced to 5.75% to maintain a symmetric interest rate corridor, while the policy rate is set at 4.25%. The SDF rate remains at 2.75%.
- Existing requirements on Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) remain unchanged.
- The rule requiring banks and financial institutions to set institutional fixed deposit rates at least 1% below personal fixed deposit rates has been removed.
- The ceiling on Personal Overdraft (POD) loans has been increased from NPR 50 lakh to NPR 1 crore.
- For loans provided by microfinance institutions against collateral, the maximum limit has been raised from NPR 7 lakh to NPR 15 lakh.
- Borrowers facing repayment difficulties may have their loan repayment schedules revised.
- In districts affected by natural disasters, including floods and landslides in Ilam, banks and financial institutions can restructure or reschedule loans with a minimum interest recovery of 10% on a one-time basis.
- Considering the rise of digital payments and the concentration of bank branches in metropolitan areas, institutions may adjust or consolidate branches in metropolitan regions.
- To strengthen transparency, accountability, and governance, banks and financial institutions will implement Anti-Bribery and Corruption Policy measures, following international best practices and internal guidelines.
This article was originally published on https://bajarkochirfar.com. Translated with the help of AI and reviewed by our editorial team.
