NRB Monetary Policy: Measures continued to reduce effects of the pandemic

Central bank keeps key policy unchanged to soften the blow from the Covid-19 pandemic; inflation target set at 6.5 percent

Ashim Neupane

  • Read Time 2 min.

Kathmandu: In a bid to support the revival of sectors hit most by the Covid-19 pandemic, Nepal Rastra Bank (NRB) on Friday unveiled the Monetary Policy for the Fiscal Year 2021/22, giving continuity to the recovery measures for the pandemic-hit sectors as in the last year.

In the Monetary Policy, the central bank has given continuity to the refinancing, credit programs for Covid-19 affected business and profession and extension of loan repayment schemes introduced last year.

Unveiling the Monetary Policy, Governor Maha Prasad Adhikari said banks and financial institutions will analyze the situation of the pandemic-hit borrowers and increase the grace period for loan repayment by reducing the installment amount.

The central bank has adopted a policy under which borrowers –  supposed to clear installments by the end of the last fiscal year – will get a grace period until mid-December for loan repayment.

Likewise, public vehicle owners hit by the pandemic will get an additional loan of Rs 200,000 for repairing and operation.

Apart from the loan rescheduling scheme, the central bank has also adopted the refinancing scheme, continuity to the facility adopted last year. Under the scheme, micro, small, and cottage industries will be given priority, according to the NRB.

In the meantime, the central bank has also announced the inflation target at 6.5 percent, down from 7 percent announced in the last fiscal year.

Similarly, an individual or firm can take a margin loan of up to Rs 40 million from a financial institution and Rs 120 million in total.

In order to promote the merger and acquisition of commercial banks, the central bank has also adopted several measures including 0.5 percent slicing on CRR for a year.    

Key highlights

  • Inflation target below 6.5 percent, down from 7 percent last year
  • Those losing jobs in tourism sector to get upto Rs 1.5 million business loans under deprived sector
  • BFIs won’t be allowed to charge more than 2 percent premium on base rate for business loans below Rs 10 million
  • Public vehicle owners hit by the pandemic to get additional loan of Rs 200,000
  • Central bank gives continuity to the refinancing scheme
  • CRR rate unchanged at 3 percent
  • SLR unchanged at 10, 8 and 7 percent for commercial banks, development banks and finance companies respectively

ncell_ad