Proceeding of an Interaction Program on Monetary Policy 2021

The policy aims at formulating monetary and foreign exchange policies, manage them in a bid to maintain price and balance of payments stability for the overall economic stability and sustainable economic development. Nepal Rastra Bank (NRB) has begun to give priority to the cottage and small industries, which contribute almost 22 percent of the country’s GDP and provides employment to almost 1.8 million people.

Monetary policy is an important policy of a country that is developed by comprises of managing the money supply and interest rates in order to achieve macroeconomic goals such as regulating inflation, consumption, growth, and liquidity. The significance of monetary policy is critical at this time, as Nepal's economy is struggling to recover from the impact of Covid-19. The following are the important highlights of Nepal's 2021 Monetary Policy.

- In the current Fiscal Year 2078/79, the refinancing policies implemented to revive the pandemic-affected industries/businesses have been maintained.

- The loan-to-capital deposit ratio has been increased from 85% to 90%.

- The existing credit resource mobilization ratio clause has been removed.

- Until Ashar 2079, the Credit Deposit Ratio shall be kept at no more than 90%.

- The CCD ratio has been removed from the equation. Meanwhile, the permissible margin lending percentage has remained unchanged since the previous monetary policy.

- To avoid overexposure to capital market risks, a business or individual can only obtain margin loans from financial institutions worth a maximum of Rs. 4 crores and a total of Rs. 12 crores.