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By Our Reporter

The Nepal Rastra Bank (NRB) unveiled the Monetary Policy for the upcoming Fiscal Year 2025/26 on Friday last week.
The first monetary policy unveiled by new Governor Biswo Nath Poudel includes measures to expand private sector credit, manage non-performing loans (NPLs) and non-banking assets and promote the share market.
Amidst growing liquidity in Banks and Financial Institutions (BFIs), the NRB has announced that it will adjust the bank rate from 6.5 per cent to 6 per cent and the deposit collection rate to 2.75 per cent from the existing 3 per cent. Likewise, the policy rate is dropped to 4.5 per cent from the current 5 per cent, NRB Governor Dr. Poudel said while unveiling the Monetary Policy.
However, critics have said that Governor Poudel followed in the footsteps of former governor Maha Prasad Adhikari while introducing the new monetary policy this time.
The lowered bank rate is expected to facilitate easier borrowing from banks, while the decreased policy rate reduces the cost of credit in the economy. Adjustment in deposit rate means less incentive to save and more incentive to invest or spend. These steps can result in more liquidity in the market, higher demand and inflation.  The central bank is confident that these steps will help in encouraging banks to lend more to businesses and individuals, reduce lending rates, and make the home, business and personal loans cheaper, avoiding the risk of high inflation.
“The inflation rate is in a comfortable position in mid-May to mid-June at 2.72 per cent compared to 4.17 per cent during the same period last year. Since there is room for some inflation, the interest rate moderation will not disturb this harmony and significantly push the prices up,” NRB Spokesperson Kiran Pandit said at a press meet held at the central bank after the launch of the monetary policy.
Likewise, the NRB has adopted a flexible policy in real estate lending, with an increase in the maximum limit for residential home loans granted to individuals for purchasing a house to Rs. 30 million from the existing Rs. 20 million.
For first-time homebuyers, the banks will now be allowed to provide residential loans of up to 80 per cent of the property’s assessed value, up from the earlier cap of 70 per cent.
Governor Dr. Poudel has also increased the limit on margin lending. The ceiling of Rs. 150 million for personal share-backed loans has now been raised to Rs. 250 million. With the implementation of this provision, individuals can now obtain loans of up to Rs. 250 million in total from various banks and financial institutions by pledging shares as collateral. This measure, combined with the decreased interest rates, is expected to drive the share market growth.
Likewise, commercial banks are allowed to increase their capital with the approval of the central bank. The BFIs will be permitted to count the regulatory reserves generated from non-banking assets held for up to two years towards their supplementary capital.
The Governor announced that the new monetary policy aims to strengthen the capital base of banks further. However, the banks should obtain approval from the central bank for the capital increment plan.
It announced a new provision that would be made to count the loan (with or without collateral) up to Rs. 300,000 mobilised to youth going for foreign employment as ‘deprived sector lending’. Such an amount for women going for jobs abroad could be up to Rs. 500,000.
The amount of foreign currency that Nepali citizens are allowed to carry while travelling abroad has been increased to USD 3,000.

In a new move, the central bank has announced a concessional loan to businesses along the Mid-Hill Highway and Postal Highway at a base rate plus 2 per cent interest rate. However, to get this facility, the businesses must be registered with the government and meet all quality standards prescribed.