June 6, Kathmandu – Nepal Rastra Bank has unveiled its new monetary policy for the fiscal year 2083–84, introducing extensive changes in both the policy’s structure and strategic stance. For the first time since its implementation in 2001–02 (2058–59 BS), the monetary policy framework has been revised. The current monetary policy review document and the analysis of the prevailing economic conditions are now prepared separately. Governor Prof. Dr. Bishwanath Poudel, who during his first term had maintained the existing policy structure, has implemented this structural reform in his second tenure.
Nepal Rastra Bank has also transformed its regulatory stance significantly. The new monetary policy seeks to distinctly separate the central bank’s monetary management and regulatory responsibilities, a point that Governor Poudel has emphasized clearly. Executive Director GurupPrasad Poudel explained that the policy focuses on monetary aggregates such as the policy rate, interest rate management, Cash Reserve Ratio (CRR), and Statutory Liquidity Ratio (SLR).
Governor Poudel has set an inflation target of 5.5 percent, which is 50 basis points lower than the government’s official target of 6 percent. The policy maintains a credit growth target of 11 percent, which is projected to facilitate approximately NPR 650 billion in additional credit flow during the upcoming fiscal year. Additionally, the target for broad money supply (M2) growth is set at 14 percent.
Commenting on the changes in the monetary policy, Santosh Koirala, President of the Nepal Bankers’ Association, remarked that the tradition of separating policy arrangements from monetary policy has now ended. He viewed positively the allowance for commercial banks to determine their operational scope based on classification, the freedom to invest in foreign debt securities, and the deregulation of interest rates. Key points of the policy include permitting commercial banks to invest in foreign government securities and eliminating provisions that allowed for unlimited liabilities arising from personal guarantees as loan collateral.
