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Kathmandu, Nepal, November 28, 2022: Nepal Rastra Bank (NRB), the central bank of Nepal, has reduced the interest rate gap (spread rate) of the banking and financial institutions (BFIs) through the first quarter review of the Monetary Policy 2022- 23.
The NRB reduced the bank's spread rate to 4 percent keeping in view the growing demand against high interest rates. The business communities had been protesting against of the high interest rate.
As the NRB has reduced the spread rate from 4.4 percent to 4 percent the premium rate charged by BFIs will decrease and the interest rate of loans will come into balance. However, the high interest rates in deposit would not reduce interest rates as per the expectation of the business community.
Likewise, the average interest rate differences of development banks and finance companies have also been reduced from five per cent to 4.6 per cent.
The NRB has also stated that it would make arrangements to calculate the shortfall from mid-December 2023 on basis of mid- June 2023 if the BFIs become unable to provide loans in the designated areas in view of the liquidity crunch.
Similarly, microfinance financial institutions will also have to publish the base rate on monthly basis from mid-January. However, the NRB has given continuity to the guidance of the monetary policy of current fiscal citing the pressures on price and external sector stability.
