The Nepal Rastra Bank (NRB) unveiled the monetary policy for fiscal year
2013/14 on Sunday, including programs to encourage expansion of banking
service to rural areas.
Through the policy, the Nepal Rastra Bank (NRB) has also announced to formulate the first ever Financial Sector Development Strategy, give priority to open micro-finances in rural areas, encourage BFIs to open branches in rural areas, extend loan against the collateral of projects of farming coffee, tea, dairy and livestock.
The monetary policy also envisages bringing down the spread rate - the difference between interest rate in loans and deposits -- to 5 percent in all BFIs. Continuing the policy to encourage merger of BFIs, the central bank has also announced to enforce a guidelines for acquisition among BFIs.
In addition to valuation of fixed and current assets of debtors, the monetary policy has also introduced a system to issue loan on the basis of cash flow and income of debtors.
Provisions to reduce share of institutional deposits to 60 percent of the total deposits mobilized by commercial banks and provide expert services to the Department of Cooperatives to support monitoring of saving and credit cooperatives with transactions of more than Rs 500 million have also been incorporated in the policy.
Similarly, the central bank will provide loans of up to Rs 2 million to micro finance Institutions (MFIs) at zero interest rate to open branches in districts with poor access to micro-finance service. Loan limit against collective collateral for good debtors under deprived sector credit has been increased to Rs 150,000 from Rs 100,000. Likewise, limit of micro-enterprises loan for such groups has been increased to Rs 400,000 from Rs 300,000.
In a bid to expand financial literacy, NRB is launching ´Nepal Rastra Bank with Student´ program along with other publicity programs.
The policy also states that loan extension of up to Rs 500,000 on projects promoted by women will be categorized under deprived sector credit.
NRB has introduced a provision under which it will provide refinancing loan at 5 percent to BFIs for loan of up to Rs 1 million extended to small and medium enterprises. However, interest on such loan should not go beyond 10 percent.
Similarly, the central bank has decided to give foreign exchange facility to foreign employment agencies on the basis of workers they send to overseas markets.
Likewise, private sector developers of infrastructure projects like hydropower, roads, and cable car services can now get loan in foreign currency from commercial banks to import necessary plant and machineries for the projects.
Reactions:
“The policy has targeted to achieve higher growth, making the task of containing inflation at 8 percent a big challenge. It will be very difficult to bring investment in agriculture and energy to 12 percent of total lending of commercial banks at a time when we have been facing problem in issuing 10 percent of our total loans to these sectors,”
-- Upendra Poudel
Vice president, Nepal Bankers´ Association
“The policy is liberal and balanced. Interest rate on loan and deposit will go down with the new provision in CRR,”
-- Krishna Raj Lamichhane,
President of Development Bankers´ Association
“BFIs can heave a sigh of relief as the policy has extended the deadline to raise their paid-up capital,”
-- Rajendra Man Shakya, President of Finance Companies Association
src : Republica
Through the policy, the Nepal Rastra Bank (NRB) has also announced to formulate the first ever Financial Sector Development Strategy, give priority to open micro-finances in rural areas, encourage BFIs to open branches in rural areas, extend loan against the collateral of projects of farming coffee, tea, dairy and livestock.
The monetary policy also envisages bringing down the spread rate - the difference between interest rate in loans and deposits -- to 5 percent in all BFIs. Continuing the policy to encourage merger of BFIs, the central bank has also announced to enforce a guidelines for acquisition among BFIs.
In addition to valuation of fixed and current assets of debtors, the monetary policy has also introduced a system to issue loan on the basis of cash flow and income of debtors.
Provisions to reduce share of institutional deposits to 60 percent of the total deposits mobilized by commercial banks and provide expert services to the Department of Cooperatives to support monitoring of saving and credit cooperatives with transactions of more than Rs 500 million have also been incorporated in the policy.
Similarly, the central bank will provide loans of up to Rs 2 million to micro finance Institutions (MFIs) at zero interest rate to open branches in districts with poor access to micro-finance service. Loan limit against collective collateral for good debtors under deprived sector credit has been increased to Rs 150,000 from Rs 100,000. Likewise, limit of micro-enterprises loan for such groups has been increased to Rs 400,000 from Rs 300,000.
In a bid to expand financial literacy, NRB is launching ´Nepal Rastra Bank with Student´ program along with other publicity programs.
The policy also states that loan extension of up to Rs 500,000 on projects promoted by women will be categorized under deprived sector credit.
NRB has introduced a provision under which it will provide refinancing loan at 5 percent to BFIs for loan of up to Rs 1 million extended to small and medium enterprises. However, interest on such loan should not go beyond 10 percent.
Similarly, the central bank has decided to give foreign exchange facility to foreign employment agencies on the basis of workers they send to overseas markets.
Likewise, private sector developers of infrastructure projects like hydropower, roads, and cable car services can now get loan in foreign currency from commercial banks to import necessary plant and machineries for the projects.
Reactions:
“The policy has targeted to achieve higher growth, making the task of containing inflation at 8 percent a big challenge. It will be very difficult to bring investment in agriculture and energy to 12 percent of total lending of commercial banks at a time when we have been facing problem in issuing 10 percent of our total loans to these sectors,”
-- Upendra Poudel
Vice president, Nepal Bankers´ Association
“The policy is liberal and balanced. Interest rate on loan and deposit will go down with the new provision in CRR,”
-- Krishna Raj Lamichhane,
President of Development Bankers´ Association
“BFIs can heave a sigh of relief as the policy has extended the deadline to raise their paid-up capital,”
-- Rajendra Man Shakya, President of Finance Companies Association
src : Republica
