{"id":5494,"date":"2025-07-12T09:40:02","date_gmt":"2025-07-12T03:55:02","guid":{"rendered":"https:\/\/himalini.com\/en\/?p=5494"},"modified":"2025-07-12T09:40:02","modified_gmt":"2025-07-12T03:55:02","slug":"nepals-new-monetary-policy-lower-interest-rates-boosted-lending-and-relief-for-banks","status":"publish","type":"post","link":"https:\/\/himalini.com\/en\/nepals-new-monetary-policy-lower-interest-rates-boosted-lending-and-relief-for-banks.html","title":{"rendered":"Nepal\u2019s New Monetary Policy: Lower Interest Rates, Boosted Lending, and Relief for Banks"},"content":{"rendered":"
\"\"
Vishwanath Paudel
Governor, Nepal rashtra bank<\/figcaption><\/figure>\n

July 12, 2025 | Kathmandu. Nepal Rastra Bank (NRB) Governor Bishwanath Paudel has unveiled his first monetary policy for the fiscal year 2082\/83 (2025\/26), taking a notably expansionary stance to revive the sluggish economy. The policy introduces reduced interest rates, expanded credit access, and structural relief for banks and financial institutions.<\/p>\n

Key Highlights<\/p>\n

Home loan cap raised: From NPR 20 million to NPR 30 million<\/p>\n

Share mortgage loan limit: Raised from NPR 150 million to NPR 250 million<\/p>\n

Agriculture and small business loans: Up to NPR 1 million without collateral<\/p>\n

SMEs access: Loans up to NPR 30 million at favorable terms<\/p>\n

Interest rate corridor adjusted downward<\/p>\n

Currency exchange for foreign travel: Increased to USD 3,000<\/p>\n

Policy Objective<\/p>\n

Governor Paudel emphasized that despite high liquidity and low lending rates, the benefits had not trickled down to the government and private sector. The new policy aims to activate economic sectors like real estate, capital markets, agriculture, and small industries by encouraging broader credit flow.<\/p>\n

Diverging Views Among Experts<\/p>\n

While the private sector has welcomed the policy with optimism, several economists warn of potential risks to financial stability. They argue that the policy lacks strong measures to protect depositors and is overly lenient across multiple sectors at once.<\/p>\n

Former Governor Maha Prasad Adhikari’s COVID-era relaxations have been reintroduced, although many components will undergo review and adjustment.<\/p>\n

Changes in Interest Rates<\/p>\n

Policy rate: Reduced from 5% to 4.5%<\/p>\n

Upper bound of interest rate corridor (Bank Rate): Reduced from 6.5% to 6%<\/p>\n

Lower bound (Deposit Collection Rate): Reduced from 3% to 2.75%<\/p>\n

These reductions aim to further lower lending rates and increase liquidity in the market.<\/p>\n

Relief Measures for the Banking Sector<\/p>\n

Regulatory reserve from non-banking assets can be counted as supplementary capital for up to two years<\/p>\n

Flexibility in working capital loans<\/p>\n

Planned revision of loan classification and loss provisioning standards<\/p>\n

Policy revision to ease blacklisting due to bounced cheques<\/p>\n

Increased share mortgage loan limit to boost capital markets<\/p>\n

Support for Microfinance and Rural Credit<\/p>\n

Microfinance dividend distribution rules under review<\/p>\n

Loans up to NPR 300,000 (NPR 500,000 for women) for migrant workers to be classified as priority loans<\/p>\n

Collateral-free loans up to NPR 1 million for agriculture or business, using assets like farmland or infrastructure<\/p>\n

Working capital loan guidelines to be relaxed based on business nature and repayment cycle<\/p>\n

Digital Banking and KYC Integration<\/p>\n

Banks and financial institutions will be allowed to integrate their Know Your Customer (KYC) systems with the national ID infrastructure. Once a customer updates their details with one bank, others can access it digitally.<\/p>\n

Private Sector\u2019s Reaction<\/p>\n

Industry bodies such as the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI), and Chambers of Commerce have praised the policy. They consider it a timely intervention to stimulate investment and help struggling entrepreneurs recover from past economic setbacks.<\/p>\n

Conclusion<\/p>\n

Nepal\u2019s latest monetary policy represents a significant shift toward economic stimulus through affordable credit, regulatory easing, and digital transformation. While it energizes the private sector, the actual impact will depend on the policy’s implementation and management of associated risks.<\/p>\n","protected":false},"excerpt":{"rendered":"

July 12, 2025 | Kathmandu. Nepal Rastra Bank (NRB) Governor Bishwanath Paudel has unveiled his first monetary policy for the fiscal year 2082\/83 (2025\/26), taking a notably expansionary stance to revive the sluggish economy. The policy introduces reduced interest rates, expanded credit access, and structural relief for banks and financial institutions. Key Highlights Home loan […]<\/p>\n","protected":false},"author":3,"featured_media":5495,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[15,13,3],"tags":[],"class_list":["post-5494","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-nepal","category-top-stories-of-madhesh"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/himalini.com\/en\/wp-content\/uploads\/2025\/07\/Screenshot_20250712_073251_Samsung-Internet-scaled.jpg?fit=2560%2C1236&ssl=1","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/paS11m-1qC","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/posts\/5494","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/comments?post=5494"}],"version-history":[{"count":0,"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/posts\/5494\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/media\/5495"}],"wp:attachment":[{"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/media?parent=5494"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/categories?post=5494"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/himalini.com\/en\/wp-json\/wp\/v2\/tags?post=5494"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}