by Karuna Thapa
Kathmandu, February 18
The Nepal Rastra Bank (NRB) has implemented a policy of tightening real estate and equity loans regulations.
The central bank agreed to grant a 100 percent margin to tighten the unproductive sector, share pledges, and imports in its mid-year review of monetary policy for the current fiscal year.
For share pledge loans, the central bank set a minimum ceiling of Rs 40 million and a maximum limit of Rs 120 million. The limit had been causing investors discontent. Due to the fact that real estate investment is also unprofitable, lending to such regions will be tightened.
The NRB has decided to raise the refinancing rate from 5% to 7% as part of its half-yearly monetary policy review, which was announced this evening.
The bank rate has been hiked by two percentage points to 7% from its present level of 5%. The new arrangement will be put in place by withdrawing the refinancing facility that is now available to entrepreneurs.
The fixed liquidity facility rate connected to the interest rate corridor has been fixed at 7 percent, policy repo rate at 5.5 percent, and deposit collection rate at 4 percent.
The central bank will examine the various types of loans issued by banks and financial institutions in order to distinguish the interest rate of credit to the productive sector from that of credit to other sectors.
From the next quarter, this arrangement will be used as a model in one area. In its semi-annual review, the central bank indicated unequivocally that it will assess the risk weight of loans such as import revenues, personal surplus loans, real estate loans related to land charting, personal hire purchase loans, and margin loans.
Energy bonds will be eligible to be issued by the Infrastructure Development Bank. In the half-yearly review, the necessary arrangements were outlined.
The provision of credit to commercial banks based on their competence in the fields of agriculture, energy, and tiny, home, small, and medium companies will be examined in light of COVID-19’s impact.
The existing system of importing products from India with a credit facility, as well as the existing system of opening accounts in convertible foreign currency in the names of non-resident Nepalis, would be examined, according to the central bank.
The remittance limit of remittances made by the remittance company through its agents and sub-agents will be evaluated, according to the evaluation.
The central bank has indicated that financial resources will be allocated toward productivity growth, job creation, and entrepreneurial development in order to strengthen the internal and external sector balance.
