KATHMANDU: Nepal Rastra Bank (NRB) has made the process of raising interest rates more systematic.
Issuing a new directive, Unified Directive, 2020, on Tuesday, the central bank states that the interest rates cannot be changed arbitrarily by banks and financial institutions.
The central bank has brought the implementation of the systematic interest rate via the new directive for class A, B and C banks and financial institutions (BFIs) from Tuesday. As per the directive, the BFIs will be allowed to change interest rates only in a systematic and transparent manner rather than changing them arbitrarily in their own way.
The directive has provided a certain amount of relief to borrowers who invest in businesses and enterprises as well as those who invest in houses, land and vehicles by obtaining loans from banks and financial institutions.
The central bank has also directed the BFIs to maintain a fixed interest rate for personal term loans with a repayment period of more than one year.
Likewise, BFIs will be able to change the interest rate on deposits on a monthly basis only, as per the directive. It also states that while changing the interest rate, the banks and financial institutions must publish a notice of the interest rate for the coming month prior to the beginning of the Nepali month.
The directive also includes the provision that BFIs need to publish the details of interest rates, base rate and interest rate differential of the last three years on their websites.