Unfolding Monetary Policy 2073/74 (2016/17)


Based on national and international economic scenario, Harmonizing & supporting the goals of recently published government budget. On 30th of Asadh, 2073 NRB published its annual monetary policy for the fiscal year 2073/74.
As per NRB governor monetary policy released ensuring application of interest rate Coridor to reduce the fluctuation of short term interest rate, maintain stability in interest rate & to modernization of monetary management.

Through this monetary policy NRB is trying to focus mainly on agriculture, Hydro power, Tourism, SMEs and other productive sectors.

Growth & Inflation..
To achive 6.5% growth rate liquidity will be managed and inflation will be limiting not exceeding 7.5%.

Interest Rate Corridor & policy rate…
Through this monetary policy Dr. C. Nepal announced to keep spread rate  at 7 % for MFc. Previously it was 5 %. For commercial bank and development bank the spread rate remained unchange at 5%.
CRR for commercial bank, development bank and microfinance company remained same  at 6%, 5% & 4% respectively. Like wise SLR for CB, DB & MFc has been kept unchanged at 12%, 9% & 8% respectively.
There is increment in bank rate by one percent. 8% BR has been determined through this monetary policy previously it was 7%.
Spread rate has been changed for MFc’s only. now they needs to follow 7% of spread rate. There is no change in spread rate (5%,5%) for commercial bank and development bank respectively.

Capital Requirement…
This is first time that NRB determined minimum capital requirement for the microfinance company. Now national level MFc needs to increase their capital to 6 billion by fiscal year 2075BS, Asadh. At present the minimum capital requirement for MFc is 1 billion.

Loan Distribution…
The policy has the provision which states that the commercial banks to issue 20% of their total loans in the designated productive sectors has been kept unchanged. But the minimum limit of the loan to be issued to the agriculture and energy sector has been increased to 15% from 12% with effect from month of Asad of next year.

Tight grip on share collateral…
The provision of issuing 60% loan on share collateral( i e. 60 % of the average price of share for the last 180 day) has been reduced to 50%.

Through this monetary policy NRB  expects that economy will be boost up. But major challenge for this policy to control price level ultimately keeping balance in monetary management which finally act as budget booster.


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