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.
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.Follow @gorkhapost