Monetary policy aims at limiting loan expansion to 12.6 percent

KATHMANDU: The Central Bank is set to control loan expansion to the private sector.

The Nepal Rastra Bank (NRB), unveiling the monetary policy for the year 2022/23, aimed to limit the loan provided to the private sector to 12.6 percent. In the previous fiscal, the NRB had set 19 percent as a loan expansion target.

As the loan expansion was high, an increase in imports and trade deficit strained the current and foreign exchange reserves, prompting the Central Bank to control loan expansion.

The NRB has taken a policy to control loan expansion and also shrink the wide money supply in order to control the rising inflation.

Last year, the expansion of detailed money supply was projected to be 18 percent, but the situation remained in the single digits, but the NRB has set a target of 12 percent for this year.

Similarly, the NRB has stated that it would manage the monetary and external sector in such a way that sufficient foreign exchange reserves are maintained to meet the import of goods and services for at least one month in the financial year 2022/23.

Likewise, the Central Bank has increased the bank rate to 8.5 percent from the last fiscal year’s 7 percent.

According to the suggestion made by the budget, inflation will be limited to 7 percent, according to the Central Bank.