KATHMANDU: The Nepal Rastra Bank (NRB) has reduced the risk weightage of vehicle loan through the third quarterly review of the monetary policy of the current fiscal year 2023/24.     The Nepal Rastra Bank (NRB) has announced changes in the risk weightage of vehicle loans as part of the third-quarter review of the monetary policy for the current fiscal year 2023/24. The central bank has reduced the risk weightage on hire purchase loans provided by banks and financial institutions from 125 percent to 100 percent.

Additionally, the NRB has introduced a provision that allows for the extension of home purchase loans based on the Debt Service to Gross Income Ratio, increasing the limit from 50 percent to 70 percent, provided appropriate evidence is presented.

In its review of the monetary policy, the NRB has also introduced a provision allowing banks and financial institutions to sell up to 20 percent of their primary capital in a single fiscal year from investments made in the mid-cap fund.

Furthermore, the loan loss provision requirement for loans classified as 'good loans' has been maintained at 1.20 percent, slightly reduced from the previous 1.25 percent.

The NRB indicated that the existing provisions related to the import and sale of silver would be reviewed. The flexibility outlined in the annual monetary policy has been maintained in this third-quarter review.

"Based on the current internal and external economic conditions and outlook, the policy rate of 5.5 percent, the deposit collection rate under the interest rate corridor of 3.0 percent, and the bank rate of 7.0 percent have remained unchanged," the review states.

The NRB also mentioned that the provision of permanent deposit facilities would be reviewed as necessary to ensure the effectiveness of the interest rate corridor. Moreover, the central bank added that necessary facilitation would be provided to enable the use of additional instruments to further strengthen the capital base of banks and financial institutions.