Major Highlights of Monetary Policy 2078/79

Governor Maha Prasad Adhikari, Nepal Rastra Bank has unveiled the monetary policy for the fiscal year 2078/79.

The refinancing policies brought to revive the industries/businesses affected by the pandemic have been retained in the current Fiscal Year 2078/79.

The loan-to-capital deposit ratio has been raised from 85 percent to 90 percent. The existing provision on credit resource mobilization ratio has been scrapped. The Credit Deposit Ratio should be maintained no higher than 90% until Ashar, 2079. The provision of the CCD ratio has been renounced. Meanwhile, the permissible margin lending percentage has been retained from the last monetary policy with no changes. In order to minimize overexposure to the risks of the capital market, an entity or individual can only take margin loans of a maximum of Rs. 4 crores from a financial institution and Rs. 12 crores in total.

In order to further promote merger and acquisition between commercial banks, the following facilities have been added to the already-existing facilities, effective till Ashad 2079:

1) Added one year of lending facilities to predetermined sectors.
2) 0.5% slicing on the Cash Reserve Ratio (CRR) for a year after commencement of joint operation.
3) 1% slicing on the statutory liquidity ratio for a year after commencement of joint operation.
4) 5% addition on the limit on the permissible deposit amount for a single financial institution.
5) Board members and higher officials of the bank do not have to complete 6 months of the dormant period before joining another licensed institution.
6) 1% leniency on the interest rate spread.
7) Misc.

Meanwhile, in order to also promote merger/ acquisition between microfinance institutions, if a wholesale microfinance institution merges with a retail microfinance institution, the merged institution can also indulge itself in retail operations. Furthermore, microfinance companies with cross-holding of commercial banks, development banks, or finance companies are required to go into merger/ acquisition by Ashar, 2079.