KATHMANDU, Feb 21: Nepal Rastra Bank (NRB) has issued a circular to bank and financial institutions (BFIs), enacting three provisions introduced through the mid-term review of Monetary Policy for Fiscal Year 2018/19.
In the circular issued to BFIs on Wednesday, the central bank directed BFIs to lower the maximum interest rates on loans floated under the general refinance fund to 8 percent.
Earlier, banks were allowed to charge up to 9 percent interest rates on such fund that the central bank provides at four percent.
Revised interest rate corridor system introduced
The new rule will provide some relief to those who utilize the refinance fund aimed at providing concessional loans to certain priority sectors.
Similarly, the central bank has also capped the maximum interest rates that BFIs can charge for export refinancing fund to 3 percent. Earlier, banks were allowed to charge 4.5 percent interest rate. The NRB provides such funds to BFIs at 1 percent interest rate.
Borrowers, who get refinance fund for manufacturing and producing goods for export purpose, will benefit from this central bank’s intervention.
The circular also includes a directive to BFIs to spend at least 10 percent of their corporate social responsibility (CSR) budget in each province toward promoting financial literacy. These new directives were introduced through the mid-term review of the monetary policy on Monday.
NRB officials say that the central bank will gradually roll out more rules for BFIs to implement the provisions announced in the mid-term review report.
