Monetary Policy Enforced: Major Changes in Loan Limits, Interest Rates, and Collateral Lending

Nepal Rastra Bank’s monetary policy for the current fiscal year 2082/83 came into effect from Thursday, Shrawan 1. With a circular sent to all banks and financial institutions, the policy has officially been implemented.

As per the new provisions, the bank rate has been reduced from 6.5% to 6%, and the repo rate has been lowered from 5% to 4.5%. The interest rate corridor has been set with an upper limit of 6% and a lower limit of 2.75%.

The loan limit against share collateral has been increased from NPR 15 crore to NPR 25 crore. Similarly, the loan-to-value (LTV) ratio for home loans has been raised from 60% to 70%, and up to 80% for first-time home buyers. The general home loan limit has also been increased from NPR 2 crore to NPR 3 crore.

In addition, individuals in earthquake-affected areas can reschedule their loans by paying a minimum 10% interest before the end of Ashoj.

Furthermore, finance companies are now allowed to collect deposits without being restricted to 15 times their core capital.