Kathmandu. Nepal Rashtra Bank has adopted a policy of reducing the interest rate to keep the economy running since the loan cannot flow due to the high interest rate even though it is an investable amount. While publishing the third quarter review of the monetary policy, the central bank has made some policy arrangements to reduce the interest rate of the banks.
Due to this strategy, the central bank has reduced the current bank rate by one percentage point to 7.5 percent. Earlier such rate was 8.5 percent. This arrangement will help in reducing interest rates on deposits and loans.
Similarly, the Rashtra Bank has also adopted more flexibility in loan investments that have been stopped due to bonds. According to one data, the banks were not able to give loans even if they had money due to the fact that the bonds worth about 60 billion rupees could not be calculated in the CD ratio after the end of June. Through the monetary review, the National Bank has arranged to allow the debentures to be counted until the end of January.
Similarly, the central bank has also taken a policy of refinancing to make the sectors that are in trouble due to the economic recession viable. As mentioned in the review, the sector related to the economic sector which has been negative in the last two quarters will be refinanced. Similarly, arrangements have been made to restructure and reorganize the loans related to hotels and restaurants, animal husbandry, construction sector and other sectors up to 5 crores by the end of June 2080. Arrangements have been made to provide more concessions for current capital loan borrowers. Current capital loans are given the facility to be extended by the end of June 2080 for a period of up to 3 months without charging any kind of damages or fees, provided that the interest is regular.
National Bank's policy to make the economy viable by reducing interest rates is aimed at stimulating borrowing and spending, which can encourage economic growth. Lower interest rates can make borrowing cheaper for businesses and individuals, incentivizing them to invest, expand, and consume more. This increased economic activity can lead to job creation, increased consumer spending, and overall economic expansion. However, reducing interest rates also carries potential risks such as inflation and asset bubbles, which need to be carefully monitored and managed by the central bank.
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