Kathmandu. Nepal Rastra Bank (NRB) has made public the annual review report of the Monetary Policy for the current fiscal year 2082/83.

According to the report made public by the Rastra Bank, about 2 dozen works are incomplete. The central bank had included some old works as well as new ones in the monetary policy of the current fiscal year. The old works have also not been completed.

According to the NRB, the Monetary Policy for the current fiscal year has stated that the interbank transactions among banks and financial institutions will be made more systematic and transparent and systemic reforms will be made so that real-time transactions can be directly monitored. For this, the company is in the process of procuring Intra-Bank Transaction Reporting and Monitoring Technology. This work has not been completed.

Similarly, the second financial sector strategy would be implemented after it is approved by the Government of Nepal. For this, the second financial sector strategy implementation action plan has been prepared and sent to the Ministry of Finance on June 1. This work could not be completed.

Likewise, it was said that the classification of existing loans and loan loss management would be studied and reviewed as per the need. That work is still limited to the study by the Rastra Bank.

Similarly, it was said that policy easing would be done in the existing system of blacklisting due to dishonour of cheques. This work is also currently under study, according to the NRB.

In order to maintain stability by minimizing the liquidity risk of banks and financial institutions, the regulatory provisions related to debt-deposit ratio would be reviewed after the effective implementation of provisions such as Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) as per international good practice. That work is also limited to the study.

In order to strengthen liquidity risk management of commercial banks, it was said that a draft guidance on the internal liquidity adequacy assessment process would be issued. The draft has only been prepared.

It was said that necessary amendments would be made in the policy and procedural provision of approval to the company giving hire purchase loans, including the calculation of the interest rate of the fit and proper test loan, service charge, etc. It is also being studied.

It was stated in the budget statement of the Government of Nepal for the fiscal year 2082/83 that necessary facilitation would be made to bring remittance income from the formal financial system, encourage investment in productive sectors and to integrate all payments from public bodies into the electronic system.

In order to further facilitate the withdrawal of remittance income from the formal financial system, the existing provision has been reviewed in Circular 2 on October 22, 2082 and Circular 5 on October 10. It is said that a study is underway to integrate the payments made by the public bodies into the electronic system.

It was also stated that a draft of the necessary act and rules for the establishment of an asset management company would be prepared and submitted to the government of Nepal. The draft of which is being prepared, according to the Rastra Bank.

It has been said that the bylaws related to prompt corrective action will be amended and the draft of the amendment of the bylaws has been prepared.

It was said that the base rate calculation method of banks and financial institutions would be improved and made more realistic. The report of the review has only been drafted.

As mentioned in the budget statement for the fiscal year 2082/83 of the Government of Nepal, legal and procedural provisions would be forwarded for the establishment of a ‘neo bank’ to expand financial access. It has been proposed in the Bank and Financial Institutions Act, 2073 (2073) amendment bill and necessary study is underway regarding the legal and policy provisions related to the establishment and operation of the neo bank.

The government of Nepal has submitted its opinion to the Ministry of Finance to include the digital bank provision in the Bank and Financial Institutions Act, 2073 and Nepal Rastra Bank Act, 2058 BS.

It was said that a detailed study would be carried out to review the classification and scope of work of banks and financial institutions. This work is also in the study phase.

It was said that the target group for microfinance, criteria for obtaining loans and eligibility of borrowers would be reviewed to increase the utilization of loans by ensuring that the loans of microfinance institutions reach the targeted groups. That work is also limited to the study.

It was also stated that the existing provisions related to gold import and sale and distribution would be reviewed in coordination with the government based on the recommendation of the study report on gold import and sale distribution. This work has not been completed. It is limited to the study.

In the context of the increasing contribution of remittance companies to the economy, it was said that a study would be conducted regarding the system of classifying such companies on the basis of capital and turnover. That too is still limited to the study. Currencies of countries with increasing foreign currency transactions, including Bangladesh and Sri Lanka, would be added to the list of convertible foreign currencies. That too has not been able to rise above the study.

It is said that the transactions and financial access to electronic means will be increased by developing a strong and secure payment system has also been limited to the study.

In order to strengthen the payment system in the current context, it was said that a new strategy would be formulated after reviewing the National Payments System Development Strategy. Only the draft of Fintech Strategy 2026/027-2030/031 has been prepared.

It was said that the inspection and supervision of payment institutions would be made risk-based. A draft of risk-based inspection and supervision procedures has been prepared and suggestions are being taken.

It was said that “Financial Customer Protection Guidance” and “Financial Market Conduct” directives would be issued to protect financial customers. A draft of the Financial Customer Protection Guidance has been prepared.

Foreign investment will be facilitated in the construction of infrastructure including data center, cloud computing, robotic lab and artificial intelligence. In addition, it was said that the flow of co-financing loans from banks and financial institutions in such projects would be encouraged. It is also being studied.

It was stated that a strategy would be adopted to further encourage e-payment transactions by reducing transactions through cheques. This is also being studied.