KATHMANDU, May 26: Nepal Rastra Bank (NRB) has reduced the risk weight for share mortgage loans to 100 percent from 125 percent, showing flexibility towards loans to be issued against shares as collaterals.
Unveiling the third-quarterly review of the monetary policy for the current fiscal year 2024/25 on Sunday, the newly appointed NRB Governor Biswo Nath Poudel said that the central bank has taken lenient policy for the country’s secondary market. Share investors have long been demanding the central bank to reduce the risk weight on the credit in the segment.
The revised monetary policy has however maintained most of the other monetary provisions unchanged. “Based on the internal economic and financial situations, the roadmap of the monetary policy has been cautiously balanced,” reads the review document.
According to the central bank, the revised monetary policy has kept the policy rate unchanged at the existing 5.0 percent, the lower band of deposit collection rate at 3.0 percent, and the upper limit of the bank rate under the interest rate corridor at 6.5 percent. The existing mandatory cash reserve ratio and statutory liquidity ratio have been left unchanged.
The monetary policy review however talks about making banks and financial institutions mandatory to maintain their cash balance at a minimum of 90 percent on a daily basis. “Considering the existing liquidity situation of the financial system and the recent improvements achieved in open market transaction instruments, the minimum cash balance has been made mandatory,” according to the central bank.
The monetary policy states that amendments will be made on “Nepal Rastra Bank Foreign Investment and Foreign Loan Management Bylaw 2021” through incorporating the provisions of the latest amendments to the Foreign Exchange (Regulation) Act 2019 and the Foreign Investment and Technology Transfer Act, 2019 with the aim of improving the investment environment.
According to the NRB, a procedure for verifying cheque dishonor will be formulated and issued in accordance with the amendment to the Banking Offence and Punishment Act, 2008.