Kathmandu. Nepal Rastra Bank (NRB) has announced its monetary policy for the fiscal year 2082/83 BS.

Nabil Bank’s banker Manoj Gyawali has said that this monetary policy has been released with the aim of being liberal towards entrepreneurs and solving banking problems.

He said that the real impact of some policy measures can be assessed only after the directives to be made public after further study of the Nepal Rastra Bank.

Monetary policy addresses many of the expected issues. Overall, the objective and direction of monetary policy is positive, he said.

He has also worked the main issues covered by the monetary policy. He has also commented on 22 points on monetary policy. In:

1. The bank rate, which is the upper limit of the interest rate corridor, has been reduced from 6.5 percent to 6.0 percent and the deposit collection rate as the lower limit of the interest rate corridor has been reduced from 3.0 percent to 2.75 percent. The policy rate has been reduced from 5.0 percent to 4.5 percent.

Impact: Deposit interest rates can go down by up to 0.25 percent. Similarly, the interest income earned by banks and financial institutions by keeping more liquidity in nepal rastra bank deposits will decrease.

2. The loan limit for construction and purchase of residential houses will be increased from Rs 20 million to Rs 30 million. At the time of construction and purchase of the first house, arrangements will be made to maintain the loan price ratio up to a maximum of 80 percent for the flow of such loan and a maximum of 70 percent in the case of others.

Impact: This is expected to help boost the real estate sector in the real estate sector by increasing both the limit of residential home loans and the credit ratio.

3. The guidance on current capital loans will be revised as per the need based on the nature of business of agriculture, small and domestic industries, education, health, sports, communication and media houses, and the loan repayment-income cycle.

Impact: The nature of the current capital loan will be modified according to the nature of the business and this will make it easier for the banks and businessmen to comply with this guidance by removing the difficulties of guidance on current capital loans that are being raised repeatedly by the entrepreneurs.

4. Classification of existing loans and loan loss arrangements will be studied and reviewed as per the need.

Impact: Bankers’ credit classification and credit loss arrangements are expected to be revised according to the timely and international practice, which is expected to reduce the loan loss arrangement and increase the profits of banks and financial institutions.

5. Arrangements will be made to include loans up to Rs 30 million in loans disbursed to small and medium enterprises and count them in the loans disbursed in the specified sectors.

Impact: This will make it easier for the banks to provide loans to the directed sector and the banks will not have to pay a penalty.

6. The provision regarding interest capitalization of loans disbursed in the energy production sector will be reviewed.

Impact: The energy sector is likely to be facilitated in interest capitalization. As a result, the interest capitalization during the construction period will facilitate the payment of loans to the entrepreneurs engaged in the energy sector.

7. The existing single customer loan limit for margin type loans from banks and financial institutions will be increased from Rs 150 million to Rs 250 million.

Effect: This increases the demand for shares in the stock market due to the increase in margin type debt. In this way, due to the increase in demand, it is likely to have a positive impact on the stock market and the share price will increase.

8. Policy facilitation will be made in the existing system of blacklisting for cheque dishonour.

Impact: As the number of blacklisted people for various reasons reaches 100,000 and most of them are entrepreneurs, it is expected that the businessmen should be blacklisted or instructed to make it easier to get out of the blacklist. As a result, the demand for loans may increase slightly in the market as businessmen continue their business or do more business.

9. Necessary facilitation will be made for restructuring and rescheduling of loans disbursed to firms÷ and companies related to land development and building construction registered with the body approved by the Government of Nepal.

Impact: Due to lack of demand in the real estate sector for the last three to four years, the real estate entrepreneurs are in trouble as well as the loan cannot be repaid and in the absence of restructuring or rescheduling, the loan will turn into a bad class.

10. The limit on which national-level finance companies of category C can mobilize deposits up to 15 times the primary capital will be removed.

Impact: The limit has been removed as the limit for mobilizing deposits is not necessary when the capital instructions have been issued equally to the finance companies.

11. Provision will be made that the amount of regulatory reserve created for non-banking assets can be counted in supplementary capital for two years after the bank and financial institution accepts it.

Impact: This will have a positive impact on the bank’s supplementary capital and increase the capital fund ratio of banks and financial institutions, which will increase the ability of banks to do business.

12. In order to facilitate the increase in capital of banks and financial institutions, arrangements will be made to increase the capital as per the requirement with the approval of this bank.

Impact: As banks and financial institutions are not in a position to do much business due to the capital fund, the monetary policy, which is required to meet the economic growth rate of 6%, can again give banks and financial institutions the right to issue right shares that have been suspended for a long time. Its impact is going to be positive in the stock market.

13. The base rate calculation method of banks and financial institutions will be improved and made more realistic.

Impact: Banks and financial institutions do not have all the operating expenses at the base rate and there is no return on the property, so there is a situation of loss of the bank by giving loans at the base rate. Therefore, if the base rate is fixed by adding at least operating expenses and minimum return, it is expected that there will be a slight increase in the return of investment due to positive impact on the profit of banks and financial institutions.

14. According to the government’s budget statement for the fiscal year 2082÷83 BS, legal and procedural arrangements will be put forward for the establishment of ‘Neo Bank’ to expand financial access.

It is expected that such banks will be established when the basic procedures and arrangements have been made for the establishment of Neo Bank and when the basic procedures and arrangements have been made for the establishment of Neo Bank through Digital Banking, such banks will be established and customers will be able to get accessible and affordable services through digital banking.

15. The existing branch expansion policy of banks and financial institutions will be reviewed in the context of strengthening the electronic payment system.

Impact: Commercial bank branches have access to all the local bodies of the country. And in urban areas, when the cost of the banking sector is only increasing with the establishment of branches of more banks and financial institutions than required, it creates a situation for the establishment of more branches in the areas where there is no access and the merger of branches with each other where there are more branches. And this will have a positive impact on the entire Banking sector.

16. A detailed study will be conducted to review the classification and working style of banks and financial institutions.

Impact: If the classification and scope of the bank can be restructured at a time when the banking transactions and services provided by the banks and financial institutions of class B and C are the same, then it will be beneficial for all the customers and financial institutions if the service facilities provided by the banks and financial institutions and each category can be guided on the basis of the type of loan.

17. According to the existing arrangement, the existing arrangement regarding distribution of more than 15 percent dividend (cash or bonus) annually by microfinance financial institutions will be reviewed.

Impact: The provision that microfinance institutions with good profits can give more than 15% profit can benefit the shareholders of the microfinance institutions who have earned good profits and will also have a positive impact on the market value of such institutions.

18. Loans up to Rs 3 00,000 disbursed to the youth going for foreign employment with or without collateral can be counted as loans of the poor. In the case of women, such loans are maximum Rs. 5 lakh will be done.

Impact: This will provide relief to ordinary citizens who have to go abroad by taking personal loans at high interest rates if they are unable to manage even a small amount of money. And due to the certainty of the source of repayment of loans given to the citizens going for foreign employment, there is less possibility of microfinance loans being bad. On the one hand, it will save the citizens from high interest rates and on the other hand, it will also help reduce the bad loans of microfinance.

19. The limit of 20 per cent of the primary capital maintained in the nondeliverable forward maintained by banks and financial institutions will be increased to 25 per cent.

Impact: This will result in a non-deliverable forward of about Rs 35 billion and reduce the amount of liquidity that nepal rastra bank has to absorb in the market. Banks will also earn more than the interest rate. This will have a positive impact on the profitability of Nepal Rastra Bank and banks.

21. It will be facilitated to obtain customer identification details of banks, financial institutions and other financial service providers through national identity cards. After the customer updates the details in one of the banks, the development of the infrastructure that the necessary bodies can get through electronic means will also be facilitated.

Effect: The cumbersome process of updating the KYC by submitting all the documents documents at different times in all the banks and financial institutions when the accounts of the same person are operating in different banks and financial institutions will now be easier as the KYC will be updated using other banks and financial institutions when the KYC is updated in one institution.

22. Arrangements will be made for banks and financial institutions to invest in debentures issued by the agencies established for the purpose of investing in the infrastructure sector designated by the Government of Nepal to raise financial resources.

Impact: Institutions established with the objective of investing in the infrastructure sector designated by the Government of Nepal will easily get resources for infrastructure development. Banks and financial institutions will get more means of investing more liquidity they have. As a result, on the one hand, infrastructure will be developed and on the other hand, there will be a slight improvement in the interest income of banks and financial institutions.