Nepal Rastra Bank

The Nepal Rastra Bank (NRB), the central monetary authority, on Monday, came up with goodies for banks and financial institutions engaged in genuine business, while tightening the noose around those trying to generate undue profit by manipulating the loopholes prevalent in banking guidelines.

These measures, in entirety, are expected to ease the shortage of loanable funds at banks and financial institutions, and root out malpractices that were tarnishing the image of the entire banking sector.

To replenish the stock of loanable funds, the NRB has allowed banks and financial institutions to calculate credit to core capital-cum-deposit (CCD) ratio by deducting 50 percent of loans extended to the productive sector.

Banks and financial institutions extended credit of Rs254 billion to the productive sector till mid-January. Since banking institutions no longer have to take into account 50 percent of these loans while calculating the CCD ratio, banks and financial institutions now have around Rs127 billion in loanable funds.