Nepal Rastra Bank (NRB) has revised inflation target by a marginal 0.5 percent to the average of 8 percent in the mid-term review of Monetary Policy for fiscal year 2013/14.
Other than this, the central bank has not made any major changes in the policy during the mid-term review.
Releasing the mid-term review report of the policy on Monday, NRB Governor Yuba Raj Khatiwada claimed that there was a satisfactory growth in economic activities during the review period after implementation of the policy. “There is balance of payment (BOP) surplus as well as high liquidity in the banking system leading to decline in short-term interest rate,” said Khatiwada. “Though the local currency weakened against US dollar in the first few months of the current fiscal year, there is now stability in the exchange rate.”
The central bank has that there was not any anticipated improvement toward containing inflation. Similarly, merchandise trade deficit observed an imbalance during the review period.
According to NRB, inflation reached 9.7 percent in the six-month period. Likewise, merchandise trade deficit increased by 23.1 percent to Rs 333.9 billion.
Khatiwada said the economic growth of 5.5 percent in the fiscal year as projected in the Monetary Policy is achievable. “The agriculture productivity will increase this year due to sufficient rainfall. Also, capital expenditure can be expected to increase with the formation of new government,” Khatiwada said, adding, “As this will increase industrial and economic activities, the projected growth rate of 5.5 percent can be achieved.”
The central bank has said that it would devise a work plan for the remaining period of the fiscal year to achieving the projected economic growth by extending loans in the productive sectors.
NRB has not changed cash reserve ratio (CR Ratio), bank rate and Statutory Liquidity Ratio (SLR) requirement for the banking and financial institutions (BFIs). Stating that the loan flow of BFIs toward private sector was in line with the targeted limit despite liquidity surplus, NRB has justified the move to keep the requirement intact to support economic growth and to not let increase the cost of fund.
Khatiwada also shared the central bank´s plan to review the current provision on margin lending. “We have carefully weighed the provision of margin lending to prevent any bubbles in the share market. The provision will be changed by taking the fluctuations of the share market into consideration,” Khatiwada added.
Keeping in view the growing number of troubled BFIs, the central bank is planning to form a separate Problem Institution Resolution Division in the NRB. “The process of forming the division is moving ahead after the preparation of Problem Bank Resolution Framework,” he added.
Likewise, NRB has already prepared Acquisition Bylaw 2014 to pave the way for financial institutions interested to acquire another bank or financial institution.
source: republica,3 march 2014
LINK
Other than this, the central bank has not made any major changes in the policy during the mid-term review.
Releasing the mid-term review report of the policy on Monday, NRB Governor Yuba Raj Khatiwada claimed that there was a satisfactory growth in economic activities during the review period after implementation of the policy. “There is balance of payment (BOP) surplus as well as high liquidity in the banking system leading to decline in short-term interest rate,” said Khatiwada. “Though the local currency weakened against US dollar in the first few months of the current fiscal year, there is now stability in the exchange rate.”
The central bank has that there was not any anticipated improvement toward containing inflation. Similarly, merchandise trade deficit observed an imbalance during the review period.
According to NRB, inflation reached 9.7 percent in the six-month period. Likewise, merchandise trade deficit increased by 23.1 percent to Rs 333.9 billion.
Khatiwada said the economic growth of 5.5 percent in the fiscal year as projected in the Monetary Policy is achievable. “The agriculture productivity will increase this year due to sufficient rainfall. Also, capital expenditure can be expected to increase with the formation of new government,” Khatiwada said, adding, “As this will increase industrial and economic activities, the projected growth rate of 5.5 percent can be achieved.”
The central bank has said that it would devise a work plan for the remaining period of the fiscal year to achieving the projected economic growth by extending loans in the productive sectors.
NRB has not changed cash reserve ratio (CR Ratio), bank rate and Statutory Liquidity Ratio (SLR) requirement for the banking and financial institutions (BFIs). Stating that the loan flow of BFIs toward private sector was in line with the targeted limit despite liquidity surplus, NRB has justified the move to keep the requirement intact to support economic growth and to not let increase the cost of fund.
Khatiwada also shared the central bank´s plan to review the current provision on margin lending. “We have carefully weighed the provision of margin lending to prevent any bubbles in the share market. The provision will be changed by taking the fluctuations of the share market into consideration,” Khatiwada added.
Keeping in view the growing number of troubled BFIs, the central bank is planning to form a separate Problem Institution Resolution Division in the NRB. “The process of forming the division is moving ahead after the preparation of Problem Bank Resolution Framework,” he added.
Likewise, NRB has already prepared Acquisition Bylaw 2014 to pave the way for financial institutions interested to acquire another bank or financial institution.
source: republica,3 march 2014
LINK
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