Nepal Rastra Bank. (File photo)
KATHMANDU: Nepal Rastra Bank (NRB), the central bank of Nepal, has tightened its screw on the deposit of reserve fund of the local levels.
Issuing a directive on Monday, NRB’s Department of Banking placed an arrangement disallowing commercial banks to invest from the reserve fund of the local level on import and commercial purpose.
According to the circular issued by Department’s Executive Director Ram Bahadur Manandhar, the commercial banks are allowed to mobilize 80 percent of the amount of local levels reserve fund as savings but not to invest in trade and import. It may be noted that the Ministry of Finance had placed an arrangement allowing commercial banks to show up to 80 percent of the cash flow to local levels as deposits some days ago.
The central bank issued a conditional circular for the execution of the arrangement put forth by the Ministry of finance.
In yet another circular issued today, NRB’s Department of Bank and Financial institutions has directed the financial institutions willing to go for merger to submit a plan of action within July 15. The central bank directed institutions having cross-holdings of shares over 10 percent for merger or acquisition process in order to reduce the number of microfinance institutions.
The arrangement will be applicable to the microfinance institutions set up by the commercial banks, development banks and financial companies as promoter shareholders. (RSS)