Central bank issues new directive on interest rate

This undated image shows the building of Nepal Rastra Bank in Kathmandu. Photo courtesy: NRB

KATHMANDU: With the liquidity crunch in the financial institutions, Nepal Rastra Bank (NRB) on Sunday issued a fresh directive to the bank and financial institutions (BFIs) by amending to the Integrated Directive, 2077 BS.

The central bank said that the directive issued on October 20 was further revised and made systematic in regard to the interest rate.

Prior to this, the BFIs were allowed to change a maximum of 10 per cent in the interest rate of the bank deposit as compared to the rate released in the previous month.

As per the recent update, the BFIs can only change a maximum of 10 per cent in the interest rate on average (except for call deposit) by calculating the average and minimum interest rate released in the previous month. If the spread rate was more than the given cap, the other rates should be adjusted by making a basis either to the maximum or minimum interest rate.

Likewise, the NRB has scrapped the provision for BFIs to increase interest rate up to 0.5 per cent points for the deposits except for call deposit and institutional fixed deposit.


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