Kathmandu, May 25
The Nepal Rastra Bank (NRB) has said that the
existing risk weight for margin lending (loan against shares) would be reduced
from 125 per cent to 100 per cent.
The central bank has
pledged this policy amendment in the third quarterly review of the Monetary
Policy of the current Fiscal Year 2024/25 published on Sunday.
Considering the liquidity situation in the
financial system and reforms made by the central banks in the tools used in
open market operations, arrangements would be made for financial institutions to
maintain a daily minimum cash reserve of 90 per cent of their total deposits
and other financial resources.
The current provisions regarding mandatory
cash reserves and statutory liquidity arrangements have been maintained.
Likewise, the existing lower and upper
limits of interest rate corridor – 3.0 per cent for deposits and 6.5 per cent
for bank rate – as well as 5.0 per cent policy rate is kept intact.
The NRB also said in the review that with
the aim of improving the investment climate, provisions including the Foreign
Exchange (Regulated) Act, 2074 and the Foreign Investment and Technology
Transfer Act, 2075, along with subsequent amendments, have been incorporated to
issue 'Nepal Rastra Bank Foreign Investment and Foreign Loan Management Bylaws,
2078'.
"Work is being carried out to
formulate a policy framework to criminalise cheque bouncing under the Banking
Offence and Punishment Act, 2064," read the report.
To maintain inflation within the desired
range of 5 per cent, the monetary policy aimed to control the expansion of
money supply. As a result, as of nine months, consumer price inflation stands
at 4.57 per cent, said the NRB.
"The current account remains in
surplus due to a significant increase in foreign exchange remittances. As of
nine months, the forex reserves are sufficient to cover the import of goods and
services for 14.2 months," read the report.
Published in The Rising Nepal daily on 26 May 2025.
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