The monetary policy regime introduced for the financial year 2082/83 has been implemented.

Through the monetary policy, the loan limit for the construction and purchase of private residential houses has been increased from 20 million to 30 million, the limit for personal share loans has been made 250 million, the loan-to-value ratio for the construction and purchase of the first house has been maintained at a maximum of 80 percent and in the case of others up to a maximum of 70 percent.

Nepal Rastra Bank issued a circular on Wednesday and instructed to implement most of the arrangements made through monetary policy. Some provisions related to policy changes have not been implemented. Experts say that both the housing loan limit and the loan ratio will increase, which will help make the real estate sector viable.

2080 October earthquake-affected areas such as Jajarkot, Rukum, and other areas affected by the earthquake, the borrowers will also get some relief for open-purpose personal loans, including loans to businesses operating in the areas and residential house loans taken by common people living in those areas. The monetary policy stipulates that at their request, banks and financial institutions can reschedule or restructure the loan subject to the specified conditions by collecting at least 10 percent of the interest to be paid based on the need and justification after analyzing the borrower's cash flow and income. "Such rescheduling or restructuring should be done by the end of October 2082," the circular said, "Thus, at the time of rescheduling or restructuring, the loans will have to be classified in the same category." The monetary policy increased the limit of margin loans from banks and financial institutions to share securities from 150 million to a maximum of 250 million. Earlier, individual share investors could take up to 150 million share mortgage loans, now they can take up to 250 million.

Now banks and financial institutions will have to publish the quarterly financial report within 15 days and the fourth quarter report within 30 days. Previously, the quarterly report had to be published within 7 days and the fourth quarterly report within 21 days.

National level finance companies like commercial banks, national level development banks have no limit on deposit collection. Earlier, such finance companies were allowed to collect deposits only up to 15 times of the primary capital. Now, people going for foreign employment will get loans up to 3 lakh rupees without collateral and women will get loans up to 5 lakh rupees. Earlier, there was a provision to give unsecured loans up to one and a half lakh to people going for foreign employment, but there was no separate provision for women. Now the limit of 1.5 lakh has been increased to 3 lakh and in case of women 5 lakh.

"The bank rate as the upper limit of the interest rate corridor has been reduced from 6.5 percent to 6 and the deposit collection rate as the lower limit of the interest rate corridor has been reduced from 3 percent to 2.75 percent," the circular said, "The policy rate has been reduced from 5 percent to 4.5 percent." This means that the money supply in the market will increase and the interest rate will decrease even more.

Banks and financial institutions have also implemented a system that allows the amount of 'regulatory reserve' created by the non-banking assets to be counted as supplementary capital for two years. The banker claims that this arrangement will have a positive effect on the bank's supplementary capital, increase the capital fund ratio of banks and financial institutions, and thereby increase the ability of banks to do business. Experts in the financial sector say that this arrangement will increase the possibility of financial stability being at risk.