Nepal Rastra Bank has announced a monetary policy for the fiscal year 2077/78 BS. In the verse of the COVID-affected economy, the monetary policy was much awaited with lots of expectations. The policy was publicly unveiled by NRB Governor Maha Prasad Adhikari. The monetary policy is expected to provide direction to the economy affected by COVID- 19 through special provisions in the banking industry and hard-hit sectors as agriculture, energy, tourism, and small and medium enterprises. The new monetary policy has introduced/implemented the following provisions.

• NRB has set a moratorium on principal and interest payments for borrowers severely affected during the current COVID-19 crisis till mid-July 2021 (one year), such moratorium for partially affected borrowers has been set for mid-April 2021 (nine months). Likewise, moratorium to borrowers in sectors that had limited impact due to COVID-19 has been set till mid-January 2021 (six months).
• NRB has made it mandatory for banks to disburse subsidised loans to help revive businesses hit hard by the coronavirus, available at five percent. NRB has also extended the loan and interest rate payment period for borrowers, from 6 months up to two years, depending on the level of impact that COVID-19 has had on different sectors.
• Annual Growth Rate target to be at 7% and to limit consumer inflation within 7%.
• Liquidity facility rate to be maintained of 5% will and deposit collection rate, which has been established as the lower limit of the corridor will be reduced from 2% to 1%.
• The Repo Rate has been reduced to 3.5% to 3%. The Mandatory cash ratio of 3 percent to be maintained by banks and financial institutions is kept intact.
• The statutory liquidity ratio of commercial banks 10 percent, development banks of 8 percent Percent, and the finance company of 7 percent. CCD Ratio has been increased from 80% to 85%.
• Commercial banks will have to issue at least 15% of their loans in the agriculture sector by 2080 Ashadh end and issue at least 10% of their loans in the energy sector by 2081 Ashadh end
• NRB has halted the issuance of new licenses to microfinance while also capped the interest rate on loans issued by such companies to 15 percent or less.
• The salary/facilities of bankers and allowances to directors shall be revised to a lower level to the existing ones.
• NRB has announced to halt issuing license to new digital payment service providers and scrap the license of those service providers failing to expand their consumer base to 300,000 by mid-July next year and those that fail to conduct monthly transactions worth Rs 600,000 on an average.
• NRB has barred banks from charging the public for interbank ATM withdrawal till the COVID-19 crisis exists.
• NRB has also promoted mega-mergers between banks and financial institutions and ensured different facilities to entities that go for the merger and acquisition process.

The provision of the new Monetary Policy has been welcomed by the business community and experts say that the monetary policy is practical for the existing situations and urge that it has a greater chance to be implemented effectively.