Rastra Bank's mid year review of Monetary Policy takes expansionary stance; Find out major highlights

Nepal Rastra Bank (NRB) has published the mid-year review of the Monetary Policy of 2076/77. The major highlights of the reports are discussed below.

According to the report, NRB has loosened the policies regarding real estate loans. Loan to income ratio for credits regarding construction or purchase of the first house for personal use should be 60% at max. This was previously 50%.

The cash reserve ratio, statutory liquidity ratio, and bank spread have been left unchanged. Similarly, the requirement for tax clearance certificate for the first house loan, loans in agriculture, tourism and SMEs from Rs 50 lakh to Rs 2 crore has been squashed.

Similarly, in order to encourage credit disbursement in priority sectors, the report states that the watch list category will be revised. Nepali citizens, firms or institutions can bring in funds from India (IC 10 crore) and other countries (USD 10 lakh) with or without interest rate by taking permission from NRB.

The report also states that in order to attract deposits from foreign organizations and Non-resident Nepalis, necessary changes will be made.

The payment gateways and card-service providers need to abide by the payment card industry, data security standard (PCI-DSS) in order to secure sensitive information. Likewise, system audits of the payment gateways will also be supervised. The process of the National Payment Gateway is also going to begin soon.

Interestingly, the dividend limit for Microfinance Companies (Laghubitta Bittiya Sanstha) has been set at 20%. If the company wants to distribute dividends (bonus and cash) above 20% then it has to separate 25% of the dividend amount into the Customer Protection Fund and 25% into the Social Responsibility Fund.