Nepal Rastra Bank (NRB) is finalizing the monetary policy for the upcoming fiscal year 2082/83, with big expectations from the private sector and policy experts. The new policy is being shaped to support the government’s targets of 6% economic growth and limiting inflation to 5.5%.
Private sector expectations are high
Key business bodies like the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Confederation of Nepalese Industries (CNI) have already submitted their suggestions to NRB. They’ve asked for reforms that boost market demand, encourage private investment, and help create jobs.
Their key demands include:
- Lowering interest rates to revive economic activities
- Ensuring smooth flow of capital to productive sectors like tourism, manufacturing, and housing
- Encouraging entrepreneurship among youth and women with subsidized loans
- Supporting formal remittance users with affordable loans
- Reviewing and relaxing current banking restrictions that limit borrowing flexibility
Simplified loans for businesses and startups
There is a strong push to ease access to working capital loans, especially for small businesses, women-led enterprises, and export-oriented industries. FNCCI suggests allowing banks to make loan decisions based on the nature of the business, while also simplifying the refinancing process.
They also want:
- Housing loan limits raised from Rs. 2 crore to Rs. 3 crore
- Removal of penalties on bank investments in private equity and venture capital
- Improved access to loans for youth-led businesses through platforms like the Nagarik App
Urgent reforms in interest rate policy
CNI emphasized that the current rules on interest rate gaps and base rate requirements should be relaxed. They argue that interest rates should reflect real market conditions, not tight regulations that hurt businesses.
Additional recommendations include:
- Eliminating the rule that prevents loans below the base rate
- Removing the cap on changes to interest rates within a short period
- Suspending the 0.5% counter-cyclical capital buffer for now
- Revisiting directed lending limits for priority sectors
Stronger central bank governance also under spotlight
CNI also proposed that NRB’s Board of Directors should include members based on expertise, not political or social connections. They want a dedicated internal committee to handle monetary policy planning, giving commercial banks more authority over loan oversight.
Finally, they ask NRB to review the loan blacklisting system and create better coordination between the monetary policy and the national budget.
The upcoming monetary policy is not just a routine update—it’s being seen as a lifeline for Nepal’s struggling economy. With rising concerns about weak demand, credit risks, and shrinking private sector confidence, stakeholders hope NRB will deliver bold decisions that trigger growth, boost jobs, and stabilize the economy.
