Himal Press 
KATHMANDU: The Nepal Rastra Bank (NRB) has kept key policy rates unchanged in its mid-term review of the Monetary Policy for Fiscal Year 2024/25.
Releasing the mid-term review on Tuesday evening, the NRB said although recent inflation trends have indicated a need to increase the policy rate, the carefully flexible approach adopted when issuing the monetary policy has been maintained due to the need to also give high priority to economic activity expansion. “The existing monetary policy rate has been maintained at 5%, the deposit collection rate, which serves as the lower limit of the interest rate corridor, at 3%, and the bank rate, which serves as the upper limit of the interest rate corridor, at 6.5%,” the central bank said in its monetary policy review.
The mandatory cash reserve ratio and statutory liquidity ratio have also been kept unchanged.
The central bank, however, has reduced the loss provision for good loans to 1%, down from the previous 1.10 percent. This reduction in provisioning for good loans will help increase profits for banks and financial institutions. Additionally, for non-deliverable forwards, the existing limit of 15% of primary capital has been increased to 20%.
The loan-to-value ratio for personal vehicles and all types of electric vehicles has been set at 60%.
The NRB, however, has made changes to the lending rates of microfinance institutions. As per the new provision, microfinance institutions are required to set interest rates linked to the base rate. The new loan interest rates will be effective from mid-May.
