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The first quarter review of Monetary Policy 2023/24 aims at facilitating banks and financial institutions, which have lending capacity of around Rs 300bn, in credit expansion.

The Nepal Rastra Bank (NRB) has taken a host of measures ranging from reducing rates to easing real estate and margin loans in the monetary policy review. “The central bank has adopted a flexible policy on interest rate corridor as banks have not been able to expand credit as expected,” Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari said. But those measures have not been proved effective. 

The private sector has been saying that tight monetary policy adopted by the central bank even while the external sector was improving was impeding economic activities in the country. To address the grievances of the private sector, the central bank has lowered the interest rate from 7.5 percent to seven percent. Policy rate too has been reduced to 5.5 percent from 6.5 percent, while deposit collection rate has been reduced to three percent from 4.5 percent.

The first quarter review has also made arrangements to reschedule and restructure loans of good borrowers, who have been unable to pay their loans. The central bank has also instructed banks to provide concessional housing loans to earthquake victims.

Industrialists have welcomed new provisions taken by the monetary policy. Former banker and banking expert Parshuram Kunwar Chhetri, however, called for honest implementation of the monetary policy provisions. “The central bank has reduced policy interest rates to 6.5 percent from seven percent in the monetary policy for the current fiscal year. But the banks increased the rates instead of lowering them,” he added. “In mid-July, the interest rate on individual fixed deposits was 9.98 percent, but banks raised it to 10.26 percent in September.”

Nepal Bankers Association Vice-president Santosh Koirala is of the view that  reduction in policy rates have put pressure on commercial banks to reduce rates. “The provision will provide relief for borrowers. Interest rates will likely come down when banks revise their interest for the month of Magh,” Koirala, who is also the CEO of Machhapuchchhre Bank Ltd, said. “The easing of realty and margin loans will also increase demand for loans.”

The central bank has reduced weighted risk of realty loans and margin loans from 150 percent to 125 percent. This will increase the capacity of banks and financial institutions to extend credit of Rs 40-50bn toward the sector. The decision to raise the monthly installment income ratio for housing loans to 60 percent from 50 percent will enable even low income users to access housing loans.

Banks and financial institutions will be allowed to give residential house loans of up to Rs 2.5m for the reconstruction of houses damaged by the November earthquakes. Banks aren’t allowed to charge a premium of more than two percentage points on the base rate for such loans. Likewise, only people designated as ‘earthquake-affected’ by the authorities concerned can avail such loans.

Banks are also allowed to spend a maximum of 40 percent from the amount deposited in their corporate social responsibility funds from the profit generated in 2022/23 and 2023/24 for reconstruction of public buildings like schools, hospitals and health posts damaged by the earthquake. The central bank has also said it would review the limit on domestic remittances and non-deliverable forward transactions.

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Chandra Prasad Dhakal said that the first quarter review has addressed institutional demands placed by them. “The direction taken by the first quarter review is positive. We are now waiting for implementation of the new provisions,” Dhakal added.

Rajendra Malla, president of Nepal Chamber of Commerce, said reduction in policy rate will help to bring interest rates down. “The weighted risk on realty and margin loans should have come down to 100 percent,” he said. 

Rajesh Kumar Agrawal, president of Confederation of Nepalese Industries, said the onus is now on banks and financial institutions to reduce rates. “Earlier, banks had increased rates even when the central bank had lowered them,” he said. He added that the policy provisions in the first quarter review will provide relief to the private sector.

The Supreme Court bench on Monday directed the Election Commission to conduct elections of Jammu and Kashmir Assembly by September 30, 2024, Outlook reported.

The five-judge Supreme Court bench delivered the verdict on petitions challenging the abrogation of Article 370 from Jammu and Kashmir.

Chief Justice DY Chandrachud during the verdict said that they have directed that restoration of statehood in the Union Territory of J&K be done at the earliest.

CJI reportedly said, "We direct that steps shall be taken by the Election Commission of India to conduct elections to the Legislative Assembly of Jammu and Kashmir constituted under Section 14 of the Reorganisation Act by 30 September 2024; restoration of statehood shall take place at the earliest and as soon as possible."

House of Representatives Secretary Padma Prasad Pandey has been recommended for the post of General Secretary of the Parliament Secretariat.

Pandey has been recommended as the General Secretary after Bharat Gautam tendered his resignation on Sunday.

Speaker Devraj Ghimire and National Assembly Chairman Ganesh Prasad Timilsina recommended him as the General Secretary of the Parliament Secretariat.

Parliament Secretariat General Secretary Dr Bharat Gautam tendered his resignation.

With just eight months of his term remaining, he submitted his resignation to President Ram Chandra Paudel, the Federal Parliament Secretariat said.

The price of gold has dropped by Rs 500 per tola in the domestic market on Monday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 117, 000 per tola today. It was traded at Rs 117, 500 per tola on Sunday.

Meanwhile, tejabi gold is being traded at Rs 116, 450 per tola. It was traded at Rs 116, 950 per tola.

Similarly, the silver is being traded at Rs 1,410 per tola today.

A man was injured in a firing in Nepal-India border area on Monday.

Nirdosh Sangraula (28) of Biratnagar Metropolitan City-8 was injured when a group of unidentified persons opened fire at him near Jogbani Railway of India this morning, the District Police Office, Morang said.

He sustained injuries on his right leg and thigh.

Sangraula is undergoing treatment at the Koshi Hospital.

Further investigation into the incident is underway, police said.

Hindu devotees are observing Bala Chaturdashi, also called Satbij Chharne din, across the country on Monday.

During the festival, the holy seeds are sown at Kailash, Gaurighat, Aryaghat, and Guheswori of Pashupati area, Panchase, Galeshwor and Lord Shiva’s shrines across the country on Mangsir Krishna Chaturdashi.

Families of those who died over the last one-year sow holy seeds and light oil lamps and keep themselves awake throughout the night, praying for the departed souls to rest in heaven.

There is a belief that one’s ancestors will have a place in heaven if such seeds are sown in the Lord Shiva’s shrines.

Devotees coming from various places of the country throng the Pashupati area; lit lights in the name of their deceased ancestors and stay awake the whole night on Mangsir Krishna Trayodashi, by chanting hymns.

They sow the Satbij early in the morning on Chaturdashi after taking a sacred bath. RSS

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