Interest rates have begun to fall and liquidity is increasing- NRB

KATHMANDU: The third review of monetary policy for the current fiscal year was released by Nepal Rastra Bank on Friday.

The central bank stated in its third review of monetary policy that the financial system’s liquidity position has improved as a result of the improvement in the foreign sector.

The central bank has noted that the interest rate has consequently started to decline. “The interest rate has gradually started to decline.”. The NRB stated in the monetary review that because of this, “credit and internal demand appear to be gradually rising as well.

As a result, the improvement in the external sector and interest rates can only be maintained if we are able to control both the overall demand for goods and services as well as increase internal production.’

According to information provided by the NRB, the percentage of non-performing loans in banks and other financial institutions has slightly increased.

The central bank has noted that non-performing loans have increased as a result of the propensity to extend loans beyond borrowers’ means, the previous rapid expansion in lending, and illegal activities aimed at the banking industry, in addition to the economic slowdown.

Even in the business environment, these non-commercial activities, according to the review, have increased risk and uncertainty.

It appears that additional assistance will be required to keep the activity going.

However, the National Bank states that in order to make it sustainable, it is necessary to develop and carry out a structural reform program in order to boost output and productivity.