Issuing a circular to banks and financial institutions (BFIs) on Tuesday, August 27, NRB set the counter-cyclical buffer to zero percent.
In the last FY, the central bank set the buffer at 0.5 percent. Following the change, the banks are now required to maintain Capital Adequacy ratio of (CAR) of 11 percent including a Tier-I Capital ( core capital) of 8.5 percent and Tier-II capital of 2.5 percent.
In last FY, the banks were required to maintain additional 0.5 percent buffer capital requiring CAR of 11.5 percent.
This change will offer substantial relief to banks regarding CAR maintenance and increase their lending capacity.
Similarly, NRB has allowed banks to keep unrecovered interest on good loans to regulatory reserve. It will also support banks to manage their capital fund.
