Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal Rastra Bank (NRB) has reduced the interest rate gap (spread rate) keeping in view the protest against high interest rate by industries and traders.
NRB has reduced the spread rate in order to control the interest rate increase through the review of the monetary policy of the first quarter of the current financial year.
The bank published the review on Sunday. Through the review, NRB has put forward a policy of not increasing the interest rate. After NRB reduced the bank’s spread rate to 4 percent, the interest rate increase has been reined in.
According to NRB, it has reduced the spread rate from 4.4 percent to 4 percent. With this, it is expected that the premium rate charged by banks and financial institutions while setting the interest rate of loans will decrease and the interest rate of loans will also be balanced. Regular monitoring of premium arrangements will also be done.
In view of the liquidity crisis, if the banks and financial institutions do not provide loans in the designated areas, an arrangement has been made to calculate damages from mid-January 2024 on the basis of mid-July 2023. The working capital loan guidance will be addressed based on the suggestions received.
The government has maintained the targets and projections taken in the monetary policy of the financial year 2022/23. Monetary instruments have continued. In the review, a policy has been taken to manage liquidity in such a way as not to cause any disruption in the payment system, to support the reflected credit flow and not to increase the immediate interest rate.
Banks and financial institutions have arranged that the investment made by banks and financial institutions in the bonds issued by public limited companies related to the agricultural sector can be calculated within the specified limits, with minimum credit investment in the sector.
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