December 4: Nepal Rastra Bank (NRB) is preparing to amend half a dozen of its provisions after a quarterly review of the monetary policy of the current fiscal year.

The central bank has concluded that the country’s economy is yet to revive from the impacts of coronavirus although the balance of payments, foreign exchange reserve and inflation are all satisfactory.

NRB is preparing to ensure that the interest rate for savings is not more than five percentage points than the interest rate fixed by banks for fixed deposits. The central bank took such decision after the banks were found lowering the rate of interest for savings.

Similarly, the central bank is also making necessary provisions so that the difference between the rate of interest among various kinds of deposit accounts is not more than five percentage points. However, this provision will not be applicable for call deposits.

Likewise, NRB is also preparing to direct banks and financial institutions (BFIs) not to auction the collateral of the depositors who have been affected by Covid-19 provided that they do not have more than six months of pending interest rates to pay. NRB Governor Maha Prasad Adhikari informed that this concept has been managed to provide relief to Covid-19 victims.

The central bank is also making arrangements to discourage unhealthy competition among banks for swapping loans. NRB has fixed 0.15 percent swap charge for prepayment of loans. Officials of NRB believe this will prevent banks from swapping loans of customers to some extent.

The central bank is also preparing to make arrangement for advance payment and to determine the timeframe for payment of loans taken on stable interest rate in order to mitigate the risk as well as for resource management. The central bank had instructed BFIs to issue long-term personal loans at a stable interest rate on October 17, to ensure that the banks do not change the rate of interest later on. Governor Adhikari says that the central bank took such decision at the right time.

“The decisions take during the Covid-19 pandemic is focused on protecting the customers rather than the regulatory body. We took the decision of stable interest rate at the right moment,” said Adhikari.