NRB Maintains Policy Continuity, Focuses on Credit Expansion and Inflation Control

Nepal Rastra Bank (NRB) has released the mid-term review of its monetary policy for the fiscal year 2022/23 (2082/83 BS), emphasizing policy continuity with priority on economic expansion, financial stability, and inflation control.

According to the review, broad money supply and credit flow to the private sector have increased significantly. In the first six months of the current fiscal year, private sector credit grew by around 3.8 percent, while deposit collection remained satisfactory. This indicates adequate liquidity in the banking system.

The inflation situation has shown signs of improvement. Annual consumer inflation has been maintained at around 5 percent. The central bank attributes this to declining food and fuel prices and improvements in the supply chain, which have helped ease price pressure.

Foreign exchange reserves remain strong. Remittance inflows have increased, and reserves are sufficient to cover imports, strengthening the country’s external sector position.

The review highlights that the non-performing loan (NPL) ratio of banks and financial institutions has crossed 5 percent on average. However, NRB has stated that financial stability will be ensured through stronger risk management, loan restructuring, and enhanced supervision.

The central bank has reaffirmed its commitment to promote lending in productive sectors such as agriculture, energy, small and medium enterprises, information technology, and tourism. It has also prioritized digital payment systems, IT infrastructure, and innovation.

Considering improvements in the global economy, easing global inflation, and a favorable monetary environment, NRB expects economic activities to gain further momentum in the coming months.

Overall, the mid-term review reflects NRB’s decision to avoid major policy changes and instead focus on maintaining stability, encouraging investment, and supporting economic recovery.