The National Bank is engaged in the final preparations for writing the monetary policy for the coming fiscal year to facilitate the flow of credit accumulated in banks and financial institutions. This time, the National Bank, which has made extensive revisions to the monetary policy structure, is preparing to encourage the expansion of quality credit in the coming year. 

The budget has set a target of achieving 7 percent economic growth in the coming fiscal year and limiting the price increase rate to 6 percent. The National Bank is engaged in a monetary policy that will expand credit and manage money in a way that will help achieve these budget targets. 

In previous years, the monetary policy included a review of the monetary policy for the current fiscal year, the current situation of the international and national economy, monetary policy and regulatory aspects all in one policy. This year, the monetary policy for the current fiscal year, the current situation of the international and national economy and the monetary policy will be released in three separate parts, said Guru Prasad Poudel, spokesperson of the National Bank. 'It is not possible to say when the monetary policy will be released right now. Preparations are underway. It will be made public after the final decision is made,' he said. 

However, a high-ranking source at the National Bank has said that the review of the monetary policy and the current state of the international and national economy have already been passed by the board of directors meeting on Sunday. 'The final discussion on the monetary policy will take place from Monday. Since only policy issues remain, there is a possibility of issuing the monetary policy by next Wednesday,' the source said. 

The source said that preparations are underway to issue the monetary policy this week as the Rastra Bank is preparing to issue a policy that will not have many policy provisions like in the past, and regulatory provisions as needed throughout the year. Governor Bishwanath Poudel is leaving for Bhutan on Thursday (25 Ashad) to participate in the governor-level meeting of the South Asian Association for Regional Cooperation (SAARC). The governor is scheduled to return from there on 28. The monetary policy can be brought even after the governor returns from Bhutan. However, the governor has already instructed the concerned department to work to make it public as much as possible before going to Bhutan. 

Discussions on the policy rate and whether to use the interest rate corridor in the upcoming monetary policy are still ongoing, and the source claims that discussions will begin on Monday. ‘Although banks and financial institutions currently have more than 1.3 trillion rupees of investable funds, almost half of the 20 commercial banks are under pressure from the capital fund. Even though the demand for credit is increasing in the market, they are not in a position to expand further credit,’ the source said. ‘Therefore, credit will have to be facilitated through monetary policy. Although there have been discussions on which areas to facilitate, it has not been decided.’

The source claims that the issue should be addressed at any cost as facilitation in credit flow is necessary to achieve the 7 percent economic growth set by the government. ‘This time, the monetary policy will be very short. It will only cover the required cash reserve ratio (CRR), interest rate corridor, bank rate, policy rate, loan-deposit ratio and other rates,’ the source said. ‘Not all regulatory arrangements come under monetary policy.’ 

The issue that the Rastra Bank will issue regulatory policy directives throughout the year as needed will be included in the monetary policy. Some new announcements other than the monetary aspect will be included in the monetary policy. The Rastra Bank is under pressure to make some new announcements mainly to support the budget brought by the government, the achievement of targeted high economic growth, the election held under the banner of the Gen-G movement, and the programs put forward by the government with a two-thirds majority. 

Sources have said that discussions have been held on revising the 5 percent limit on loans to the disadvantaged. The policy was introduced when the total loans of banks were around 7 trillion. Now the total loans have reached 59 trillion. Again, many questions have been raised regarding the utilization of loans flowed under the title of disadvantaged groups. 

During the on-site visits of Rastra Bank officials and the Governor himself, many examples of misuse of the disadvantaged groups have been found. Due to the demand of banks to revise the limit of the disadvantaged groups, the state of proper utilization, and other reasons, high-ranking officials at the Rastra Bank are also ready to revise it. But since the policy is only going to cover small and quick monetary aspects, why include the issue of poor class loans, when that can be done later through regulatory arrangements, the issue has been raised. In such a situation, sources claim that the issue of revising the limit of poor class loans will not be included in the monetary policy.