Kathmandu: Nepal Rastra Bank, the country’s central bank, has just released its first-quarter monetary policy review for the current fiscal year 2082/83 (2025/26), and the message is clear: it’s time to make money a little cheaper and a lot easier to borrow.
The most eye-catching move is the cut in key interest rates. The upper bound of the interest-rate corridor—the rate at which banks can borrow overnight from the central bank—has been trimmed from 6 percent to 5.75 percent, while the main policy rate itself has been lowered from 4.5 percent to 4.25 percent. The floor of the corridor stays unchanged, but the signal is unmistakable: borrowing costs are heading down.
At the same time, the bank has swept away some long-standing restrictions that had started to feel outdated. Banks no longer have to keep institutional fixed-deposit rates at least one percentage point below personal fixed-deposit rates, a rule that often frustrated corporate treasurers.
Personal overdraft limits have been doubled from five million to ten million rupees, giving middle-class and upper-middle-class households far more breathing room. Microfinance institutions, which serve some of the country’s poorest borrowers, can now extend collateral-based loans up to Rs 1.5 million instead of the earlier ceiling of Rs 700,000, and they’ve been given flexibility to rework repayment schedules for clients who have genuinely fallen on hard times.
In a nod to the devastating floods and landslides that struck several districts recently, including Ilam, the central bank has allowed commercial banks and finance companies to restructure affected business loans once, charging a minimum interest rate of just 10 percent. It’s a practical lifeline for small and medium enterprises trying to get back on their feet after nature wiped out inventory, machinery, or premises.
Finally, with digital payments growing fast and metropolitan areas already saturated with bank branches, the NRB has given lenders permission to consolidate or close overlapping outlets in big cities without having to seek regulatory approval for every merger. The move should help banks cut costs and redirect resources toward underserved rural areas or toward strengthening their digital offerings.
Taken together, the changes amount to a quiet but meaningful easing of monetary conditions—designed to revive credit growth, support disaster recovery, and remove irritants that had built up over the years, all while keeping inflation risks in check.
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