In line with the budget for this year, the monetary policy has focused the monetary facilitation and availability of financial resources for the growth of domestic production, creation of employment and development of entrepreneurship.
The policy has prioritized the strengthening of banking and financial institutions, mobilization of resources in banking sectors, increase in people's access to commercial service and stabilizing loan rate with the effective management of the liquidation.
Although it is challenging to contain inflation within 6 percent, the policy has made it a major goal. Similarly, adequate management of foreign exchange reserve to suffice the import of the goods and services for at least seven months in the year has been targeted. Similarly, broad money supply would be limited within 18 percent, while internal money supply within 24 percent and the internal loan supply in the private sector within 21 percent.
The policy has given continuation to fixed currency exchange rate. In a bid to combat the fluctuation of short term interest rate, the interest corridor would be made effective. The upper limit of the interest corridor would be up to 6 percent, while the repo rate would be limited to 4.5 percent as policy level rate, and the minimum deposit collection rate within 3 percent.
According to the provision, banks and financial institutions can impose maximum three percent interest on loans from debtors availing special re-loan service, and seven percent from debtors availing general re-loan service. There is a provision that banks and financial institutions can take out loans from pension fund and hedge fund apart from banking sector while expanding the area wherein they can bring in foreign loans.
Commercial banks are required to compulsory issue the loan paper tantamount to minimum 25 percent of its paid capital within last week of Nepali month of Asar, 2077 BS, while cent percent funds of the loan paper issued by banks can be used to disburse loans.
Banks and financial institutions are required to get a permanent account number (PAN) registered in releasing loans in lump or at different dates. The limitation of disbursing such loan has decreased to Rs 5 million from earlier Rs 10 million or above.
Commercial banks are needed to continue the provision of disbursing 15 percent loan in energy and tourism and a minimum 10 percent in agriculture. Likewise, development banks and financial companies are required to continue disbursing minimum 15 and 10 percent loans of their total credit respectively in the priority areas.
