The third quarterly review of monetary policy has been released by
Nepal Rastra Bank (NRB) for The fiscal year 2079/80.
The major goals of the Nepal Rastra Bank are to maintain price and
exchange stability for the benefit of economic stability and the long-term
growth of the economy, as stated in the Nepal Rastra Bank Act, 2058.
- The
improvement in foreign exchange reserves has increased the ability to meet
imports.
- There
has been an improvement in remittance flow in the current financial year.
- The
liquidity position of the banking sector has improved with the resumption
of savings. As a result, the base rate and interest rate have started to
decrease.
- There
has been a slight increase in the size of non-performing loans held by
banks and other financial institutions. In addition to the rise in
non-performing loans, non-commercial activities directed at the banking
sector have had a negative impact on the business environment.
- Average
inflation is expected to be slightly higher than projected. For the
first nine months, the average consumer inflation was 7.91 percent.
- In
the fiscal year 2079/80, the goal is to maintain foreign exchange reserves
sufficient to cover at least 7 months of goods and services imports.
- The
financial system's liquidity situation has improved as a result of the
current financial year's improvement in the external sector. As a result,
monetary management measures have been used less frequently in the current
fiscal year compared to last year to inject liquidity into the financial
system.
- By
the end of Chaitra of the current financial year, Rs. 498 Arba 64 Crores
net liquidity has been flowed through open market transactions.
- Since
Poush 1, 2079, up till the conclusion of Chaitra of the current fiscal
year, banks and financial institutions have utilized the overnight
liquidity facility on several occasions, totaling Rs. 1218 Arba 63 Crores.
- Through
the acquisition of foreign currency in the foreign exchange market,
liquidity amounting to Rs. 557 Arba 81 crore had flowed by the third
quarter of the current fiscal year.
- The
weighted average interbank rate between banks and financial institutions
was 7.01 percent in Chaitra 2079.
- In
Chaitra 2079, the weighted average interest rate of 91-day treasury bills
remained at 9.74 percent.
- The
average base rate of commercial banks is 10.48 percent in Chaitra 2079.
- The
weighted average interest rate of deposits in Chaitra 2079 is 8.26 percent.
- The
weighted average interest rate of loans in Chaitra 2079 is 12.84 percent.
- The
Lender of Last Resort (LOLR) Facility is available to banks and financial
institutions that are unable to manage liquidity through the interbank
market, daily liquidity facility, open market transactions, and permanent
liquidity facility. This facility imposes a penalty rate of 2 percentage
points on the bank rate in response to demand.
- After
examining the cash flow and income of the various industries and
businesses, a plan will be put in place that will let loans that are up to
Rs. 2 crores in size and in the active category at the end of Poush 2079
to be restructured and rescheduled by the end of Ashad 2080. Small and
medium-sized firms will be able to function more easily as a result.
- The
bank rate was lowered from 8.5 percent to 7.5 percent as a result of the
monetary review that the Central Bank announced on Friday. As a result,
the interest rate on government bonds is decreased, and banks are under
pressure to raise deposits at a low cost.
- Lastly,
the central Bank has not directly addressed the real estate and stock
market in the third quarter monetary policy review.
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