Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal Rastra Bank (NRB) has unveiled its monetary policy for the fiscal year 2082/83 (2025/26), introducing a series of relief measures including an increase in the home loan limit to Rs 30 million (Rs 3 crore). The new policy, announced on Friday by Governor Dr. Bishwanath Paudel, is designed to cautiously ease monetary conditions and support economic revival.
Unveiling his first monetary policy as governor, Dr. Paudel declared that the central bank has maintained the loan-to-value (LTV) ratio for home loans at 80%, enabling individuals to borrow up to 80% of the property value for their first home construction or purchase, with a maximum ceiling of Rs 3 crore.
Home Loan Interest Capped at Base Rate + 2pc
In another significant move, the interest rate on home loans up to Rs 30 million will be capped at only 2% above the base rate, providing further affordability to borrowers at a time when the real estate and construction sectors are struggling due to subdued demand and tight liquidity.
Credit Expansion Target Set at 12pc
The monetary policy has set a 12% credit expansion target for the fiscal year. To inject liquidity into the banking system and encourage lending, the interest rate corridor has been narrowed, and the NRB has indicated it will issue NRB bonds as needed to manage liquidity.
Easing for Project Loans and Capital Mobilization
In an effort to facilitate large-scale projects, the central bank has announced that project loans will be moved toward a self-regulation model, reducing bureaucratic obstacles for banks and financial institutions involved in infrastructure financing.
Additionally, the NRB will encourage banks to offer specialized financial services and will introduce provisions to support capital enhancement, including permission for banks to issue rights shares (haqprad shares).
Other Major Announcements in the Monetary Policy:
Agricultural Loan Simplification: The policy includes provisions to simplify the disbursement of agricultural loans, improving credit access for farmers.
Loss Management Flexibility: Banks will now have greater flexibility in managing losses on loans up to Rs 1 million.
Loan Restructuring Extended: Ongoing loan restructuring facilities have been extended.
Loan-to-Deposit Ratio (LDR) Review: The central bank will reassess the LDR, a critical indicator in managing credit flow and liquidity risk.
Share Mortgage Loan Limit Raised: As already announced, the individual ceiling for share-backed loans has been raised from Rs 150 million to Rs 250 million.
Governor Paudel emphasized that this policy aims to balance growth with financial stability by encouraging credit expansion while keeping risks under control. “The monetary policy has been designed cautiously but flexibly, ensuring credit reaches the productive sector while maintaining macroeconomic stability,” he said.
Your email address will not be published. Required fields are marked *
Comment *
Name *
Email *
Website
Save my name, email, and website in this browser for the next time I comment.
