Nepal Rastra Bank is set to unveil monetary policy for current fiscal year today.
NRB has called executive board meeting in the morning to pass the policy. Gunakar Bhatta, spokesperson of NRB has informed that the policy will be released at 4 pm later today. Governor Maha Prasad Adhikari gave briefing to Prime Minister Sher Bahadur Deuba about monetary policy yesterday evening. Adhikari has been cautioning about a stricter policy since a long time.
Last year also NRB had released a tighter monetary policy to control inflation. It changed the reserve requirement for banks from Credit to Core capital and Deposit(CCD) ratio to Credit to Deposit (CD) ratio which soaked up significant creditable fund from banks. This caused liquidity cruch in financial institutions throughout last year.
Similarly, last year NRB imposed limit in margin lending, popularly known as 4/12 which prohibited individual to take more than Rs 40 million loan from single bank and Rs 120 million loan from overall financial institutions for margin purpose loans. This move directly affected share market of Nepal which decreased by almost 40% in a year.
NRB tries to maintain inflation, long term interest rate through monetary policy. However another major function of monetary policy is to enhance employment opportunities which has remained significantly unaddressed in previous policies. As data indicates, unemployment rate was 4.64% in 2019, 4.72% in 2020 and 5.05% in 2021.