Central bank introduces new interbank lending rules, Mandates ‘Mero Kitta’ integration for banks

KATHMANDU: The Nepal Rastra Bank (NRB) has introduced new regulatory provisions governing interbank lending among banks and financial institutions, while also requiring licensed institutions to integrate with the government’s digital land information platform, Mero Kitta.

The new measures have been incorporated through NRB’s latest Unified Directives aimed at strengthening financial sector oversight, improving transparency, and promoting digital service delivery.

Donor-Funded Government Programs Exempted From Interbank Lending Limits

Under the revised provisions, loans and credit transactions conducted between banks and financial institutions for the implementation of Nepal Government programs supported by international development partners will no longer be classified as interbank lending.

According to the central bank, such transactions will be treated separately from conventional interbank borrowing arrangements.

However, NRB has made it mandatory for banks and financial institutions participating in such programs to submit detailed information about the projects to both the Bank and Financial Institution Regulation Department and the relevant supervisory department of the central bank.

The move is expected to facilitate smoother implementation of donor-funded development projects while ensuring regulatory oversight.

Interbank Borrowing Not to Be Used as Regular Credit Facility

The central bank has also reiterated that interbank lending arrangements should not be used as a substitute for regular financing facilities.

Under the revised framework, banks and financial institutions may continue to lend to one another for short-term liquidity management purposes, but the maturity period of such interbank loans has been capped at a maximum of seven days.

“Banks and financial institutions shall not use interbank borrowings as a regular credit facility,” the directive states, emphasizing that interbank transactions are intended primarily for short-term liquidity support.

Financial sector analysts say the provision is aimed at preventing excessive dependence on interbank borrowing and encouraging prudent liquidity management practices across the banking system.

Mandatory Use of ‘Mero Kitta’ for Land-Related Services

In a separate provision, NRB has introduced a new requirement related to land administration services.

All banks and financial institutions licensed by the central bank will now be required to enroll as institutional users of the government’s Mero Kitta digital platform to access land-related records and services.

Through the platform, financial institutions will be able to obtain:

• Land maps and cadastral records
• Field book documents
• Plot register printouts
• Other land administration services provided by the Survey Department

Banks will also be required to make related revenue payments through the online system.

The directive is expected to accelerate the digitalization of land-related processes used in loan approvals, mortgage verification, collateral assessments, and property-based lending.

Push Toward Greater Financial and Digital Efficiency

The latest regulatory changes reflect the central bank’s broader efforts to modernize Nepal’s financial sector, improve transparency in banking operations, and support the government’s digital governance agenda.

The exemption granted to donor-funded government programs is expected to facilitate the flow of development financing, while the mandatory adoption of the Mero Kitta system is likely to reduce paperwork, improve efficiency, and strengthen the digital verification process for property-backed loans.

The new directives take effect immediately and apply to all licensed commercial banks, development banks, finance companies, and other regulated financial institutions operating in Nepal.