NRB bid to expand access to financial services in rural areas
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KATHMANDU, JUL 21 -
The monetary policy for the fiscal year 2011-12 released by the Nepal Rastra Bank (NRB) on Thursday has provisioned that D class financial institutions (FIs), which expanded their branches in nine districts having low access to financial services, can borrow up to Rs 1.5 million from the central bank without any interest for a certain period.
The central bank will also issue new licences to D class FIs that seek reach to such areas. The provision is aimed at expanding access to financial services in rural areas. D class financial institutions include cooperatives and microfinance institutions.
As the access to financial service in the Far-western and the Mid-western regions is very low, the central bank will carry out a research to expand the financial access in these regions.
The monetary policy has also increased the portion lending--which banks and financial institutions (BFIs) are required to make to the deprived sector--by 0.5 percent.
Now, commercial banks will have to make a lending of 3.5 percent, development banks 3 percent and finance companies 2.5 percent of their total loan portfolio to the deprived sector. “The central bank will continue to increase the figure by 0.5 percent every year for the next three years,” said NRB Governor Yubaraj Khatiwada.
The monetary policy has also allowed BFIs to lend in foreign currencies to hydropower projects and invest in various monetary tools issued in foreign currencies.
The limit of foreign exchange facility that an individual gets against the passport has been increased to $2500 from the current $2000. An individual can now get up to $5000 in a year. Currently the figure stands at $4000. Non-Resident Nepalis have also been allowed to open accounts in foreign exchange here.
In a bid to minimise depositors’ risk of losing money due to bank failures, the policy has asked commercial banks to get individual deposits up to Rs 200,000 insured. Earlier, the policy was implemented only in B, C and D class financial institutions.
Given some financial institutions landing in trouble due to bad governance, the central bank will take a number of supervisory measures such as early warning system, contingency plan, and stress tests, among others.
The monetary policy seeks to maintain a balance of payment surplus of Rs 5 billion in the current fiscal year. The country had been witnessing a balance of payment deficit for the last two years.
As far as inflation is concerned, the policy aims at maintaining the price rise at 7 percent and has projected an economic growth of 5 percent.
Given the liquidity crunch in the banking sector still not over, the cash reserve ratio (CRR) has been lowered by 0.5 percent to 5 percent. This move is expected to give some relief to BFIs as they will get an additional liquidity of Rs 4 billion with this measure.
Posted on: 2011-07-21 05:52
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