The Confederation has welcomed the inclusion of various policy provisions that, by changing the traditional patterns of the past, send a positive message to the financial system and the private sector.
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The Confederation of Banks and Financial Institutions has stated that the upcoming fiscal year's monetary policy has taken a direction toward maintaining balance in the economic imbalance seen in the economy.
According to a statement issued by the Confederation, the monetary policy for fiscal year 2083/84, made public by Nepal Rastra Bank, has adopted a balanced approach in its monetary directives aimed at maintaining price stability, stability in the financial sector, regulatory simplification, and overall economic balance.
The Confederation has welcomed the inclusion of various policy measures that, by changing the traditional approach of the past, send a positive message to the financial system and the private sector. “The policy has decided to keep the policy rate, standing deposit facility rate, bank rate, cash reserve ratio, statutory liquidity ratio, and standing liquidity facility unchanged in order to manage non-performing loans in sick industries, revive stressed loans, help make the business environment more predictable, and maintain policy stability,” the statement reads. “The process of opening or closing bank branches will be made more flexible, banks will be encouraged to reduce operating costs by digitizing financial services, and liquidity management through foreign currency purchases will be made easier.”
Similarly, CIBFIN has regarded policy measures such as encouraging commercial banks to invest in foreign government bonds and conducting sterilized interventions during foreign currency purchases as forward-looking and positive steps.
The Confederation has said that some important suggestions it submitted during the formulation of the monetary policy—such as risk-based loan loss provisioning, loss provisioning on secured loans based on total risk, some regulatory easing regarding capital adequacy, and improvements in prudential regulation in line with international practices—have not yet been addressed.
Nevertheless, the Confederation believes that, given Nepal’s current economic situation, the increasing capital pressure on the banking sector, the management of non-performing loans, and the need to make credit flow to the private sector more effective, the policy will make a significant contribution to achieving the government of Nepal’s goal of economic expansion.
