The Nepal Rastra Bank published its First Quarter Monetary Policy Review on 26 November 28, 2021. Here is an highlight from the policy document.
Monetary Policy Stance
Credit flow and imports have surged with the speeding of the economic recovery. Accordingly, the stance of monetary policy has been continued while being cautious for managing the surging credit demand, increasing the base of resource mobilization and ensuring resource availability for productive activities. In addition, monetary management will be made more effective taking into consideration the recent pressure on balance of payment and the likely pressure on inflation.
Monetary and Financial Measures
The existing cash reserve ratio, bank rate and statutory liquidity ratio have been kept unchanged.
Provision will be made for the banks and financial institutions to submit an action plan for maintaining the credit to deposit ratio within the specified limit by July 2023 after approving such plan from the board of directors.
Considering the position of foreign reserve, cash margin will be made mandatory while opening letter of credit for importing specified goods.
The existing limit of Document Against Payment and Documents against Acceptance will be revised.
The maximum limit for importing silver will be tied up with the foreign exchange facility given for imports through draft and TT.
The existing provision for the interest rate and fees on borrowing in foreign currency will be revised.
The provision for mobilizing deposits in foreign currency from the non-resident Nepalese and the institutions involving the non-resident Nepalese will be further simplified.
The existing limit on foreign currency non-deliverable forward will be revised.
The policy documents can be accessed here.
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