NRB Releases Mid-Term Review of Monetary Policy: Key Changes in Loan Interest Rates 

Nepal Rastra Bank (NRB) has published the mid-term review of its monetary policy for the current fiscal year. The central bank’s board approved the review in a meeting held today at 5 PM.

Nepal Rastra Bank (NRB) - the official site of the Central Bank of Nepal 

 

Key Highlights:

• Policy Rates Unchanged: NRB has decided to keep the policy rate at 5.0%, the deposit collection rate at 3.0%, and the bank rate at 6.5% to support economic growth.
• Microfinance Loan Interest Rates: Starting from Jestha 2082, microfinance institutions must set their loan interest rates based on the base rate system, ensuring fair pricing for borrowers.
• Loan-to-Value (LTV) Ratio: Personal and electric vehicle loans will have an LTV ratio of 60%, meaning banks will finance up to 60% of the vehicle’s value.
• Loan Loss Provision Reduced: Banks now need to set aside 1% instead of 1.1% for good loans, which is expected to boost bank profits by Rs. 5 Arba.
• Foreign Exchange Flexibility: The limit on non-deliverable forward contracts has increased from 15% to 20% of primary capital, allowing banks to manage foreign exchange risks better.

These changes aim to support businesses, improve banking profitability, and maintain financial stability in Nepal.