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Nepal Rastra Bank (NRB) has announced a series of measures aimed at reviving sluggish credit growth and easing pressure on businesses amid excess liquidity in the banking system in the mid-term review of the Monetary Policy for fiscal year 2025/26.

The central bank has relaxed provisions related to working capital loans and expanded the scope of priority sector lending. However, it has kept key monetary instruments unchanged, including the interest rate corridor, the bank rate, the cash reserve ratio (CRR), and the statutory liquidity ratio (SLR).

Banks and financial institutions (BFIs) will now be allowed to determine the tenure and limit of permanent working capital loans based on their own analysis of a borrower’s cash flow and financial statements. Currently, banks can extend permanent working capital loans for 3-10 years. Once the change comes into effect, banks will have greater flexibility to assess borrowers and fix appropriate limits accordingly.

The central bank has also eased a controversial provision requiring borrowers to reduce their working capital loan outstanding by at least 10 percent for at least seven consecutive days each year. This threshold will now be revised to 30 percent.

The private sector had long complained that the 10 percent rule was creating operational difficulties, particularly for businesses with continuous working capital needs. NRB said the provision will be amended to provide relief while maintaining financial discipline.

NRB has also broadened the definition of priority sectors. In addition to agriculture, energy, and micro, cottage, and small enterprises, the revised framework will now include tourism, IT, and export-oriented industries based on domestic raw materials. The central bank said the existing requirement for BFIs to maintain minimum lending ratios in each specified sector will also be revised.

At present, commercial banks must allocate 15 percent each of their total loans to agriculture and micro, cottage, and small enterprises, and 10 percent to energy. Development banks are required to extend at least 20 percent of their loans to agriculture, small enterprises, energy, and tourism, while finance companies must maintain a minimum of 15 percent in these sectors.

To help manage excess liquidity, NRB has increased the limit on non-deliverable forward (NDF) investments in foreign currency. Banks may now invest up to 30 percent of their core capital in NDF instruments, up from the existing 25 percent. The ceiling had previously been lowered to as little as 15 percent during periods of liquidity stress.

The decision to raise the NDF limit would allow banks to deploy surplus funds abroad amid a liquidity surplus situation. Additionally, loans extended to businesses displaced by the expansion of the East-West Highway and the Mid-Hill Highway can be restructured or rescheduled at a minimum interest rate of 10 percent until mid-July 2026.

The central bank has also pledged to facilitate foreign investment in physical infrastructure, such as data centers, cloud computing, robotic labs, and artificial intelligence (AI) facilities. It said banks and financial institutions will be encouraged to participate in co-financing such projects.

NRB has also said it will adopt a strategy of promoting electronic payments by gradually reducing check-based transactions. The review also calls for the effective implementation of provisions that prevent borrowers facing genuine situational difficulties from being blacklisted immediately. Borrowers already on the blacklist may be removed for up to six months if they present valid reasons and begin repaying their dues.

The price of gold has increased by Rs 5, 600 per tola in the domestic market on Monday. 

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 326, 100 per tola today. It was traded at Rs 320, 500 per tola on Sunday. 

Similarly, the price of silver has increased by Rs 35 and is being traded at Rs 6, 020 per tola today.

The Nepal Stock Exchange (NEPSE) plunged by 885. 32 points to close at 1769. 60 points on Sunday. 

Similarly, the sensitive index dropped by 199. 68 points to close at 256. 82 points.

A total of 13,193,462-unit shares of 342 companies were traded for Rs 945. 64 billion. 

Meanwhile, Barahi Hydropower Public Limited (BHPL) was the top gainer today with its price surging by 6. 74 percent.

Likewise,  Unilever Nepal Limited (UNL), Bottlers Nepal (Balaju) Limited (BNL), Bottlers Nepal (Terai) Limited (BNT), Aatmanirbhar Laghubitta Bittiya Sanstha Limited (ANLB) and Upakar Laghubitta Bittiya Sanstha Limited (ULBSL) were the top losers as their price fell by 10. 00 percent.

At the end of the day, the total market capitalization stood at Rs 2. 97 trillion.

The price of gold has increased by Rs 5, 600 per tola in the domestic market on Sunday. 

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 320, 500 per tola today. It was traded at Rs 314, 900 per tola on Friday. 

Similarly, the price of silver has increased by Rs 245 and is being traded at Rs 5, 985 per tola today.