Nepal Chamber Feedback Monetary Policy 2082/83: Interest Rate Cut and Credit Expansion Welcomed
14th July 2025, Kathmandu
The Nepal Chamber of Commerce (NCC) has officially welcomed the Monetary Policy for the Fiscal Year 2082/83, calling it a positive and financially facilitative measure poised to inject new life into the nation’s economy.
NCC Feedback Monetary Policy 2082/83
The chamber believes this policy will be instrumental in economic revival and enhance credit flow, thereby energizing the entire financial sector.
Addressing Liquidity and Interest Rates
A significant focus of the new policy, as highlighted by the NCC, is its potential to address the current excess liquidity in the market. The Chamber projects that expanding private sector credit by 12% in the upcoming fiscal year could effectively resolve this issue.
In a recent press statement, the NCC underscored key adjustments to the interest rate corridor: “The upper limit of the interest rate corridor, which is the bank rate, has been reduced from 6.5% to 6%, and the policy rate has been brought down from 5% to 4.5%. This move is expected to manage liquidity in the market and prevent interest rate hikes,” the statement read.
Boosting Real Estate and Construction
The new policy introduces several provisions aimed at stimulating the real estate and construction sectors, both of which have been grappling with slowdowns. The NCC particularly lauded the decision to increase the loan limit for private residential house construction or purchase from NPR 20 million to NPR 30 million.
Furthermore, the provision allowing a loan-to-value (LTV) ratio of up to 80% for housing loans and 70% for other purposes is expected to significantly boost the real estate business.
The Chamber believes these measures will contribute directly to economic momentum. The NCC also expressed appreciation for the policy’s focus on restructuring and rescheduling loans disbursed to the housing and real estate sector, along with positive provisions aimed at reviving the weakened construction sector.
Flexible Lending for Key Sectors
The Monetary Policy’s flexible approach to working capital loan guidelines has also been well-received. The NCC welcomed the proposed revisions based on the nature of businesses and their income-repayment cycles, specifically benefiting agriculture, cottage and small industries, education, health, sports, communication, and media houses.
Additionally, the Chamber lauded the provision allowing up to NPR 1 million in agricultural and business loans. The inclusion of loans up to NPR 30 million within the definition of Small and Medium Enterprises (SMEs), which will count under designated loan sectors, is seen as a move that will promote small-scale agricultural loans and facilitate low-interest lending.
Support for Hydropower and Capital Market
Recognizing the challenges in the energy sector, the NCC emphasized that a revision of the provision related to capitalizing interest on loans disbursed for energy production would significantly benefit borrowers in the hydropower sector.
For the capital market, the Chamber welcomed the increase in the margin loan limit for a single borrower from NPR 150 million to NPR 250 million, a move expected to provide greater flexibility for investors.
Ease of Doing Business and Travel
The new policy also introduces measures to ease business operations and foreign travel for Nepalese citizens. The NCC appreciated the move to ease the current policy that leads to blacklisting individuals due to bounced cheques, stating that such regulatory relaxation is timely and necessary for Nepalese businesses.
Furthermore, the decision to increase the foreign exchange facility for Nepali citizens traveling to countries other than India from USD 2,500 to USD 3,000 has been positively received by the Chamber.
Empowering Youth for Foreign Employment
A notable and positive provision highlighted by the Chamber is the introduction of collateral-free loans ranging from NPR 300,000 to NPR 500,000 for youths going for foreign employment. While welcoming this initiative, the NCC suggested that its practical implementation should be effective to truly benefit the target group.
Call for Further Reforms and Coordination
Despite the overall positive outlook, the Chamber stressed that the existing provisions for loan classification and loss provisioning need clearer review and revision based on current needs.
Critically, the NCC reiterated its long-standing demand that instead of merely revisiting the current working capital loan guidelines, they should be scrapped entirely, considering the prevailing financial context.
Finally, the Chamber called for effective coordination between the national budget and the monetary policy to ensure robust stimulation of the national economy.
For more: NCC Feedback Monetary Policy 2082/83
