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Governor of the Nepal Rastra Bank (NRB), Maha Prasad Adhikari, has said the monetary policy released today would ease loan expansion of banks and financial institutions. 

Responding to queries of the media persons after unveiling of the monetary policy, he shared that it has been expected that the market would be vibrant after loan expansion.

Governor Adhikari mentioned that disbursement of loan would increase as the provision of capital fund arrangement of banks and financial institutions has been made flexible. 

"Banks and financial institutions were unable to expand loans in lack of arrangement of capital funds despite having sufficient liquidity. Expanding loans means to increase loan disbursement. We have set a goal that 12.5 percent of loans will be disbursed in the current fiscal year", explained Adhikari.

It has been projected through monetary policy that the broad money supply would be 12 per cent for the current fiscal year.

Similarly, he stressed that some provisions have been brought in the monetary policy to ease the construction sector which is in trouble for not getting payment from the government.

"There are multifaceted effects due to trouble in the construction related sector and cooperative sector. There was a situation where the construction companies did not get contracts after their cheques bounced, blacklisted after they did not get their payment on time", added the Governor.

Through the Monetary Policy, the NRB has extended the period for paying the principal and interest of the loans issued to the construction entrepreneurs until December 15, 2024, a provision has been made not to put the contractors in the black list only on the basis of check bounce until another provision is made on notice of loans, a separate arrangement would be made regarding the provision on the ceiling of credit rating while utilizing the banking facilities and facilities outside the ledger among the loans.

Similarly, regarding the loans arising through claims on surety of construction entrepreneurs, provisions have been made on loan classification and maintaining the loan loss as other loans for the current fiscal year from the date the loan was created. 

Governor Adhikari claimed that a flexible monetary policy has been brought in a balanced and cautious manner so that the overall economic and financial system does not face problems. He opined that the provisions in the monetary policy alone would not be enough to put to an end the slowdown seen in the existing economy.

"It begets more risk if efforts are made to address all things only through monetary policy. The monetary policy gives stability to the interest rate in the market and at the same time creates the environment for investment. Works should be carried out ahead synchronization among various entities and policies," the NRB Governor asserted.

The new monetary policy for the current fiscal year 2024/25 has some special arrangements to implement and facilitate various five provisions in the budget of the current fiscal year.

Unveiling the new monetary policy today, Governor of Nepal Rastra Bank Maha Prasad Adhikari said that the new policy will ease off the process to obtain loan on mortgage of agricultural products.

Similarly, the central bank, through the new policy, has made further easier the provision of the budget to provide loans without collateral based on the assurance of the remittance from those foreign migrant workers obtaining labor permit and to encourage the loan flow from the banks and financial institutions for innovation.

To address the problems existing in the cooperatives, the new policy seeks to facilitate the government for the implementation of the system of refunding the money of saver members of the cooperative up to Rs 500,000 on the security deposit on assets that is in the name of the cooperative's proprietor or members of the same family.

Furthermore, the new policy has special provision to promote entrepreneurship as mentioned in the budget. The new policy will facilitate aspiring entrepreneurs loan in easy and simple manner.

The maximum limit Rs 200 million set for institutional loans has been abolished.

Unveiling the monetary policy for the fiscal year 2024/25 today, Governor of Nepal Rastra Bank Maha Prasad Adhikari informed about this flexibility in share mortgage loans.

The Bank, however, has not introduced any new provision as for the share mortgage to individuals. Governor Adhikari said, "At this situation when the margin trading could not be done easily and systematically, the existing maximum limit of Rs 200 million for the loan provided by banks and financial institutions to institutional investors for margin trading in share securities."

The monetary policy stated that the 34 security brokerage companies have been approved to promote the concept of margin trading by gradually reducing the direct loan investment from the banks and financial institutions in the securities market.

The Nepal Rastra Bank (NRB) has unveiled a monetary policy of the current fiscal year with a target of encouraging the microfinance institutions for merger. 

The monetary policy has a priority of protecting clients' interest addressing the complaints regarding service of such institutions.

NRB Governor Maha Prasad Adhikari said necessary regulatory arrangements would be placed keeping the protection of clients' interest based on international good practice in priority.

The monetary policy has made arrangements of contemporary review on regulatory arrangement related to interest rate on loan and service charge taken by microfinance institutions, as well as rescheduling the loan by paying a certain percent of interest for customers who are unable to pay their loans to the microfinance institutions due to the situation.

Further arrangements would be made to encourage those microfinance institutions working by limiting its scope of work in any certain province and place, reads the monetary policy.