Nepal Rastra Bank published the Mid-Term Review of the Monetary Policy for Fiscal Year 2082/83 on 12th Falgun 2082. The key highlights of the mid-term review are presented below:
- Economic and Monetary Situation
Economic Growth: The economy is projected to grow by 3.5 percent in the current fiscal year.
Inflation: Inflation decreased from 5.41 percent in Poush 2081 to 2.42 percent in Poush 2082, indicating improved price stability.
Remittance Inflow: During the review period, remittance inflow increased by 39.1 percent, reaching NPR 1,062.93 billion.
Foreign Exchange Reserves: The current foreign exchange reserves are sufficient to cover imports of goods and services for 18.1 months.
Non-Performing Loans (NPL): The average NPL ratio of banks increased from 4.62 percent in Ashad 2082 to 5.42 percent in Poush 2082.
- Major Policy Changes
Working Capital Loan: The provision requiring borrowers to reduce outstanding loan balances below 10 percent for at least seven consecutive days annually has been revised to 30 percent.
Sectoral Credit Expansion: In addition to agriculture and energy, tourism, Information Technology (IT), and export-oriented industries based on domestic raw materials will now be included under priority sector lending.
Relief for Businesses Affected by Highway Expansion: Businesses displaced due to the expansion of the Mahendra Highway and the Mid-Hill Highway may restructure or reschedule loans until Ashad end 2083 by paying 10 percent interest.
Blacklist (Credit Information) Provision: Borrowers unable to repay loans due to genuine circumstances will not be immediately blacklisted. Upon submission of valid reasons, banks may temporarily remove borrowers from the blacklist for up to six months to facilitate repayment.
Investment in Technology: Foreign investment will be facilitated in infrastructure development such as data centers, cloud computing, robotics, and Artificial Intelligence (AI).
- Other Important Provisions
Cash Transaction Limit: Payments of NPR 500,000 or above must be made compulsorily through cheque or bank account transactions.
Microfinance Lending: The collateral-based lending limit of microfinance institutions has been maintained at NPR 1.5 million.
Share Market and Real Estate Sector: The flexible policy stance of monetary policy toward the stock market and real estate sector will continue.
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