Monetary Policy 2022: Focus to boost productivity

The Monetary Policy for the current fiscal year 2022-23 has been unveiled aiming at keeping external sector stability by controlling inflation. The monetary policy has focused on promoting overall fiscal stability and boosting productivity by mobilizing fiscal instruments for the productive sector.

Unveiling the policy today, Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari said the policy has cautiously brought tight measures in a way to support the government's target of achieving higher economic growth.

As shared, the policy has placed emphasis on mobilizing loans in the productive sector rather than expanding credit in the context of a high credit-GDP ratio. Likewise, the policy has laid focused on gradually reducing facilities and regulatory arrangements provided during the COVID-19 pandemic and formulating wise regulatory standards.

The re-financing facility would be subject to revision so as to limit the facility to the most-affected sectors including productive sectors and export and the areas which are yet to be recovered from the effects of pandemics.

The monetary policy has put emphasis on enhancing access to credit for the small, cottage, micro and medium-scale enterprises and gradually slashing loan centralization.

Similarly, the policy will keep differences in interest rates of loans to be mobilized in the definite productive sector and business sector.

As a robust fiscal system enhances the effectiveness of the outreach of monetary policy, it has laid emphasis on maintaining financial stability through overall self-regulation and reforms in credit quality.

The policy has also set a target to expand the scope of monetary policy by enhancing financial literacy, financial access and financial inclusion as well as digitalizing payments and financial transactions.

Merger and acquisition facility expanded up to next mid-January

The policy has extended the timeline for the merger and acquisition of banks and financial institutions.

Governor Adhikari shared that the banks and financial institutions adopting mergers and acquisitions up to next mid-January would be provided with the facilities for this.

Earlier, the NRB had given the merger and acquisition facility deadline up to mid-July.

Likewise, there would be no halt of transactions of the banks and financial institutions while going for merger and acquisition. Earlier this arrangement was in place. With the new policy shift, the merger and acquisition would be as per the regulation of the Securities Board of Nepal.