Nepal Rastra Bank (NRB) has published the first quarterly review of the current fiscal year’s monetary policy, introducing more flexible measures to support liquidity and credit growth.
According to the review made public on Monday, NRB has reduced key interest rates under the interest rate corridor and increased the limit for personal and microfinance loans.
Key Decisions Announced
1. Interest Rate Corridor Adjustments
- Standing Liquidity Facility (SLF) rate reduced from 6.00% to 5.75%.
- Policy rate reduced from 4.50% to 4.25%.
- Deposit collection rate remains unchanged at 2.75%.
These reductions aim to lower borrowing costs and encourage economic activity.
2. Increased Personal Overdraft Loan Limit
- The limit for personal overdraft loans has been raised from NPR 50 lakh to NPR 1 crore.
3. Rule on Institutional vs. Personal Fixed Deposit Rates Removed
- Banks are no longer required to maintain institutional fixed deposit rates at least 1 percentage point lower than personal fixed deposit rates.
- This removes the previous mandatory provision and offers more flexibility to banks in setting interest rates.
NRB stated that these adjustments are part of a strategy to maintain economic stability while supporting credit expansion in a controlled manner.
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