NRB Directs 90% Daily Cash Reserve (CRR) for A, B, C Class Banks from Jeth 18
28th May 2025, Kathmandu
Nepal Rastra Bank (NRB) has instructed banks and financial institutions to maintain at least 90% of the mandatory cash reserve daily from Jeth 18. This new rule replaces the previous requirement of 70%. The directive was released through a circular issued on Wednesday.
NRB 90% Daily Cash Reserve
Mandatory Reserve Remains 4% Of Deposits
The overall requirement for cash reserve remains at 4% of the total deposit liabilities. This amount must be maintained with NRB. However, the percentage of this amount that must be kept daily has now been raised to 90%.
Applicable To All Banking Classes
This rule applies to all ‘A’, ‘B’, and ‘C’ class banks and financial institutions. NRB emphasized that the provision will be enforced starting from 18 Jestha (1 June, 2025).
Previous Requirement Was Lower
Earlier, institutions were required to maintain only 70% of the cash reserve daily. That rule had been in place since Bhadra 12, 2079(28 August 2022). The new move is part of NRB’s monetary policy review for the current fiscal year.
Aim To Improve Cash Management
NRB says this decision will help tighten financial discipline. The goal is to strengthen liquidity management across banks and financial institutions.
How The Reserve Is Calculated
The required reserve is calculated based on weekly average deposits. That is, the total deposits from Sunday to Saturday are divided by seven. Likewise, the maintained reserve is averaged over 14 days, from one Sunday to the second Saturday.
Risk Weight On Share Loans Adjusted
Alongside the CRR changes, NRB has also announced that share mortgage loans will carry a 100% risk weight. Previously, loans up to Rs. 5 million secured by shares had a 125% risk weight.
Intended To Increase Stability
The update is intended to reduce risks and ensure more stable and predictable banking operations. The stricter reserve rule is expected to reduce volatility and support financial stability.
Impact On Banks And Public
Banks will now need to be more careful in cash management. They might limit aggressive lending or adjust liquidity buffers. This could lead to tighter credit in some cases. However, regular customers are unlikely to see immediate impacts.
NRB’s Policy Reform Continues
This is part of NRB’s ongoing strategy to implement stricter regulations. The central bank continues to focus on strengthening the financial sector through improved compliance and control.
Looking Ahead
With the new rule coming into effect soon, banks are preparing for changes in liquidity management. The financial sector is watching closely to see how this affects credit availability and operational flexibility.
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