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NRB unveils new Monetary Policy for Fiscal Year 2017/18

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KATHMANDU — Nepal Rastra Bank has unveiled the Monetary Policy for Fiscal Year 2017/18 on Sunday amid a function organised in Kathmandu.

The central bank, in a policy, has prioritised lending to the ‘productive’ sector, which encompasses hydropower, agriculture, tourism, export, small and medium industries, pharmaceuticals, cement and garments.

Unveiling the monetary policy for fiscal 2017-18, the central bank directed directed commercial ‘A’ class commercial banks to increase the flow of credit to the ‘productive’ sector by five percentage points to 25 per cent of their total lending by mid-July, 2018.

The central bank has directed ‘A’ class financial institutions to extend 10 per cent of their total credit to agriculture, five per cent to tourism, five per cent to hydro-power and the remaining five per cent to other productive sectors.

This is the first time the monetary policy has determined credit extension for tourism sector.

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As per the new monetary policy, development banks are also required to extend minimum 15 per cent of their total lending to the productive sector, while the requirement for finance companies has been set at 10 per cent.

NRB has also aimed at limiting inflation to seven per cent, in line with the target announced by the government through the budget for 2017-18.

The monetary policy has also doubled the refinance fund to Rs 20 billion. Of this amount, up to Rs 5 billion can be extended as refinancing facility to the hydro-power sector.

The central bank has also adopted a policy that has discouraged corporate deposits in banks and financial institutions. NRB has fixed the policy rate of three per cent under the interest rate corridor.

The central bank has also allowed hotels to provide exchange facility of up to $300 to their clients on top of the bill amount raised by the hotels.

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NPC urges government to seek clarification from Chinese firm

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KATHMANDU — The National Planning Commission (NPC) has urged the government to seek clarification from China Three Gorges International Corporation (CTGC) over the construction of the Paschim (West) Seti Hydro Power Project.

The meeting of the NPC that began on Sunday, made the decision of seeking clarification from the company with a time period of 90 days regarding the construction of 750 MW hydropower project.

The hydropower project, which is expected to be completed in an investment of 1.60 billion rupees, will have 65 percent investments from the CTGC, 25 percent from the National Electricity Authority (NEA) and the 10 percent investments from the locals as share, as per the plans made before.

CTGC can sell off its 14 percent of its total 65 percent share to the Nepali investors. But the CTGC has been showing dissatisfaction over the rate of purchasing the electricity per unit (PPA). Previously it had asked the NEA to review the rate but got a negative response.

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“We have suggested the government to interrogate the company whether it will be able to complete the project or not. What has been the problem to expedite the construction along with the terms and conditions which the company wants to put forward,” NPC Vice President Swarnim Wagle said.

The CGTC, which has been delaying the construction over its dissatisfaction over the PPA, has been threatening to walk out of the construction.

The project, which covers the area of Doti, Dadeldhura, Baitadi, and Bajhang districts of Far Western Development Region of Nepal, can produce 3.33 billion units of electricity on yearly basis, accoridng to the probability study of the project.

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