Bi-annual Review of Monetary Policy

Kathmandu, Feb 25: Nepal Rastra Bank has made public the bi-annual review of the monetary policy for the current fiscal year 2081/82.     

Following the review, the central bank has kept the existing policy rate and deposit collection rate set for banks and financial institutions unchanged. Similarly, some changes have been made in the arrangements related to vehicle loans.     

The existing policy rate has been maintained at five percent through the bi-annual review. Similarly, the deposit collection rate remains at three percent and the bank rate at six and a half percent, the Rastra Bank said.     

Banks and financial institutions have received some concessions in the provisions related to credit flow. The existing loan loss provision of 1.10 percent for good loans has been set at one percent.     

The loan-to-value ratio of vehicles has been revised through the bi-annual review. Earlier, there was a provision to provide loans of up to 80 percent on electric vehicles, but according to the new provision, the limit of loan-to-value ratio for personal vehicles and all types of electric vehicles has now been set at the 60 percent.     

The NRB had claimed that this policy would further support the expansion of economic activities and achieve the economic growth target set by the Government of Nepal. However, the financial and monetary indicators up to mid-Magh of the current fiscal year show that most of the indicators, except for external indicators, are in a bad state.     

Analyzing the credit flow up to six months of the fiscal year 2081/82, the NRB claims that economic activities are in the process of expansion. The average inflation rate in the first six months of the current fiscal year is 4.97 percent.(RSS)