KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal Rastra Bank (NRB) has announced its Monetary Policy for Fiscal Year 2024/25, featuring significant changes to enhance economic activity.
The central bank has reduced the bank rate from 7% to 6.5% and the policy rate from 5.5% to 5%, while maintaining the deposit collection rate at 3%.
The new policy introduces collateral-free loans for foreign workers with the condition of depositing remittances into their accounts and lifts the Rs. 20 crore cap on share collateral loans for institutional investors.
It also includes measures such as increasing the credit expansion target to 12.5%, easing loan provisions for real estate and high-value items, and using cooperative assets to refund deposits up to Rs. 500,000.
Additionally, NRB has removed the Rs. 200 million cap on share mortgage loans to boost margin trading and has implemented rate cuts to stimulate the sluggish construction sector.
NRB unveils Monetary Policy 2024/25
Nepal Rastra Bank unveiled the Monetary Policy for Fiscal Year 2024/25 on Friday.
Through this policy, the central bank of the country has slashed the bank rate and the deposit collection rate.
“The upper limit of the bank rate in the interest rate corridor has been maintained at 6.5 percent from 7 percent and the policy rate has been fixed at 5 percent from 5.5 percent,” said the NRB Governor Maha Prasad Adhikari, while unveiling the Policy.
However, the deposit collection rate that remains as the lower limit of the interest rate corridor has been kept unchanged at 3 percent.
Collateral-free loans for foreign workers
Nepal Rastra Bank (NRB) has introduced a policy allowing collateral-free loans for individuals with foreign work permits.
According to the fiscal year 2081/82 monetary policy announced by Governor Maha Prasad Adhikari, these loans will be granted on the condition that borrowers commit to channeling their remittances into their bank accounts.
NRB lifts cap on share collateral loans, lowers policy rates, and boosts credit expansion target
Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari unveiled the fiscal year 2081/82 monetary policy, which removes the Rs. 20 crore cap on share collateral loans for institutional investors to boost margin trading, while maintaining limits for individual investors.
The policy also cuts the provisioning requirement for performing loans from 1.20% to 1.10%, potentially enhancing bank profitability.
It emphasizes the merger of microfinance institutions, strengthens customer protection, and revises regulations on interest rates and service charges.
Additionally, NRB has lowered its policy rates to 5% and 7%, increased the credit expansion target to 12.5%, and will ease loan loss provisions for real estate, high-value vehicles, and share mortgages up to Rs. 5 million. The bank will also avoid blacklisting private equity-backed institutions to foster investment.
NRB to refund deposits up to Rs 500,000 using cooperative assets as collateral
Nepal Rastra Bank (NRB) has revealed a new measure to refund depositors up to Rs 500,000 by using assets of cooperative operators and their families as collateral.
Governor Maha Prasad Adhikari announced this initiative as part of the fiscal year 2081/82 monetary policy, aiming to resolve problems in the cooperative sector.
This follows a previous commitment by former Finance Minister Barsaman Pun to return similar deposit amounts.
Rs 200 million cap on share mortgage loans lifted to boost margin trading
Nepal Rastra Bank (NRB) has removed the Rs 200 million cap on share mortgage loans in its new monetary policy, announced by Governor Maha Prasad Adhikari.
The policy, effective from Friday, also approves 34 securities brokerage firms to boost margin trading, aiming to reduce direct bank investments in the securities market and support institutional investors.
Policy and bank rates cut to boost sluggish construction sector
Nepal Rastra Bank (NRB) has announced reductions in both the policy and bank rates as part of its fiscal year 2081/82 monetary policy.
Governor Maha Prasad Adhikari disclosed that the policy rate will decrease from 5.5% to 5%, and the bank rate will drop from 7% to 6.5%. These cuts are intended to invigorate the sluggish construction sector.
Gold and silver prices drop significantly in domestic market
On Friday, gold prices in the domestic market fell by Rs 300 per tola, with fine gold trading at Rs 144,700, down from Rs 145,000 the previous day.
Standard gold was priced at Rs 144,000 per tola. Additionally, silver prices saw a notable decline, dropping Rs 1,730 per tola from Rs 1,750 the day before.
This decrease in precious metal prices could reflect shifts in market demand or broader economic factors influencing the commodity markets.
(Compiled and prepared by Srija Khanal)
Economic Digest is a daily morning economic digest, basically relatable summations of the most important business news, and happenings from Nepal into easy-to-understand summaries.
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