CIBFIN Welcomes Visionary Monetary Policy for Fiscal Year 2083/84
10th July 2026, Kathmandu
The Confederation of Banks and Financial Institutions Nepal has officially welcomed the newly released Monetary Policy for the Fiscal Year 2083/84.
CIBFIN Welcomes Visionary Monetary Policy
The umbrella organization described the regulatory document as a visionary and positive framework that offers necessary operational relief to the banking sector while boosting confidence among private business owners.
According to the banking body, the new guidelines adopt a balanced approach aimed at maintaining price stability, enhancing financial sector resilience, implementing regulatory simplification, and protecting overall economic stability. The association noted that the central bank has departed from traditional monetary frameworks by introducing progressive measures that send a positive signal to the entire financial system.
Praising Measures for Distressed Assets and Financial Stability
The association particularly praised the strategic policy provisions related to the management of non-performing loans within distressed industries. The revised instructions offer clear pathways for the revival of stressed credit lines, allowing commercial enterprises to restructure their debts without facing immediate liquidation.
The banking group also expressed satisfaction with the central bank decision to keep its key monetary policy rates unchanged, ensuring business predictability:
- Policy rate and bank rate: Maintaining these indicators at steady levels helps commercial lenders project their cost of funds accurately for the upcoming quarters.
- Standing deposit facility rate: Keeping this baseline steady prevents sudden shifts in how banks park their short term surplus capital.
- Cash reserve ratio and statutory liquidity ratio: Ensuring these essential reserve margins remain unchanged protects commercial investment limits.
- Standing liquidity facility: Stabilizing this safety window guarantees reliable backup access for institutions dealing with temporary clearing strains.
Welcoming Structural Flexibility and Digital Transformation Paths
The corporate body welcomed the regulatory decision to make the process of opening and closing physical bank branches much more flexible. This operational adjustment allows commercial management teams to optimize their network footprints based on actual regional transaction volumes and municipal market demands.
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The association also supported the explicit policy focus on driving the digitalization of everyday financial services to lower overall banking operating costs. Furthermore, allowing commercial banks to invest corporate liquidity in foreign government securities helps domestic firms manage surplus funds generated through foreign currency purchases.
The implementation of continuous sterilized interventions during foreign exchange transactions was also cited as a positive tool to insulate the local currency from global market shocks. These integrated steps help domestic institutions safeguard their underlying asset quality while expanding modern electronic access points across all provinces.
Highlighting Key Policy Recommendations Left for Future Review
Despite its broad support, the banking association pointed out that several of its core structural recommendations were not incorporated into the final policy text. The banking community intends to continue advocating for these adjustments during upcoming regulatory evaluation rounds.
The missing recommendations focus primarily on several complex areas of credit risk management:
- Risk-based loan loss provisioning: The association supports shifting away from rigid provisioning tables toward dynamic frameworks that reflect actual loan risks.
- Expected credit loss models: The group recommends calculating asset provisions based on total secured asset exposure rather than simple outstanding balances.
- Capital adequacy reforms: The bank owners seek flexible capital conservation buffers to help local institutions manage growing balance sheet pressures.
- International prudential standards: The organization emphasizes the need to align local commercial directorship rules with modern global banking practices.
Commitment to Cooperative Dialogue and Sustainable Growth Goals
Despite these omissions, the executive board expressed confidence that Nepal Rastra Bank will review these pending structural proposals. The group anticipates that the central bank will address these urgent issues through upcoming Unified Directives, taking into account increasing capital pressures on commercial houses and the clear need to improve private sector credit flow.
The association reaffirmed its long term commitment to working closely with the central monetary authority and the Government of Nepal through continuous dialogue and policy cooperation. By ensuring the effective implementation of the new monetary policy, the organization aims to strengthen the commercial banking system, support private sector business recovery, and contribute to sustainable national economic growth.
