Nepal Rastra Bank is set to publish its first quarterly review of the monetary policy today. The review comes as the financial system faces unusual levels of excess liquidity and slow credit demand.
According to legal provisions, the central bank must publish the quarterly review within 45 days after the end of the first quarter. This year, the bank is releasing it one day later than last year after holding a board meeting to finalize the document.
The financial sector is watching closely because the review is expected to focus on handling excess liquidity, encouraging credit growth and improving confidence in the capital market.
The biggest challenge for banks and financial institutions right now is the large amount of unused money stuck in the system. Nearly 11 trillion rupees worth of idle liquidity has piled up, remittance inflows are rising sharply, and credit demand remains weak. All these factors have created pressure on the overall financial structure, making liquidity management the central theme of this review.
