Nepal Rastra Bank’s revised Monetary Policy receives positive nod from private sector

KATHMANDU: Nepal Rastra Bank’s (NRB) recent unveiling of the first quarterly review of the monetary policy for the current fiscal year received a positive response from the private sector on Friday.

Notable changes include a reduction in the risk weight of real estate loans and the maintenance of the risk weight for share mortgage loans exceeding Rs 50 million at 125 percent. The central bank also made key adjustments, lowering the bank rate from 7.5 percent to 7 percent and revising the policy rate to 5.5 percent from the existing 6.5 percent.

Chandra Prasad Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), expressed optimism, stating that if properly implemented, the revised monetary policy could create a positive market environment. Dhakal commended the central bank’s restructuring and rescheduling of credit until the end of April, seeing it as a commendable step towards revitalizing the economy.

He also praised the formation of an advisory committee for monetary policy and the commitment to credit restructuring through bilateral agreements between borrowers and banks, citing them as positive moves by the NRB.

Rajesh Agrawal, president of the Confederation of Nepalese Industries (CNI), welcomed the reduction in the policy rate, anticipating that it would prompt banks and financial institutions to lower their interest rates. However, he remained cautious, waiting to observe the policy’s implementation.

Investors in shares viewed the revised monetary policy as a beacon of hope for those who have lost confidence in Nepal’s stock exchange market. The adjustment in the risk weightage cap on loans against shares, particularly reducing it to 125 percent for amounts exceeding Rs 5 million, was seen as a positive development by Rajan Lamsal, vice-president of the Nepal Investors’ Forum.

While acknowledging that the monetary policy addressed nominal issues in the stock exchange market, he anticipated a positive impact on the overall financial market.

Sunil KC, president of Nepal Bankers’ Association, highlighted that the revised policy rate and bank rate would aid in reducing banks’ interest rates, especially considering the already declining interest rates in the country.