By Our Reporter
Nepal Rastra Bank (NRB) has reviewed its third-quarter monetary policy for the current fiscal year 2023/24 giving continuity to the flexible measures adopted to accelerate economic activities.
In the reviewed monetary policy made public on Friday, the NRB has made easy arrangements for purchasing real estate. A flexible policy has been taken on debt service to gross income ratio to purchase real estate.
According to the bank, the Debt Service to Gross Income Ratio to purchase real estate will be increased from the existing 50 per cent to 70 per cent based on the submission of tax clearance payment.
After the implementation of this provision, those who buy real estate with a loan will be able to use up to 70 per cent of their income for instalment payments. Previously, only up to 50 per cent of the income could be paid this way.
The central bank has also reduced the risk weightage of higher purchase loans.
The bank has mentioned that it will reduce the risk weightage on vehicle loans under hire purchase nature and maintain it at 100 per cent.
“The existing 125 per cent risk weightage on hire purchase vehicle loans provided by banks and financial institutions will be reduced to 100 per cent,” said the NRB.
This will encourage banks to provide loans for vehicles.
The NRB has stated that necessary facilitation will be provided to bring additional tools into use to further strengthen the capital fund of banks and financial institutions.
Similarly, an easy policy has been taken to sell investments made by the banks.
“Banks and financial institutions will be allowed to sell up to 20 per cent of their primary capital in one fiscal year from the investments that have completed a year,” said the NRB.
The existing loan loss provision for loans classified as a good category from the banks and financial institutions will be reduced from 1.25 per cent to 1.20 per cent.
The NRB has said that the existing arrangement regarding the import and sale of silver will be reviewed.
After the entrepreneurs of this sector made their request to review the provision regarding the import and sale of silver, the NRB decided to review the existing provision in this regard, said the NRB.
Policy rate, bank rate unchanged
According to the NRB, the policy rate, the deposit collection rate under the interest rate corridor and the bank rate have been kept unchanged based on the internal and external economic situations and scenarios.
The existing policy rate of 5.5 per cent, deposit collection rate under the interest rate corridor of 3 per cent and bank rate of 7 per cent have been kept unchanged.
Similarly, the existing mandatory cash reserve ratio and statutory liquidity ratio have remained unchanged.
By March 12, 2024, the average non-performing loans of banks and financial institutions reached 3.98 per cent of total loans.
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