November 15: Nepal Rastra Bank (NRB) has issued a fresh directive to the bank and financial institutions (BFIs) by amending the Integrated Directive, 2077 BS to address the liquidity crunch faced by the financial institutions.    
The central bank said that the directive issued on October 20 was further revised and made systematic in regard to the interest rate.    
Prior to this, the BFIs were allowed to change the interest rate by a maximum of 10 per cent on the basis of the interest rate of the particular bank released in the previous month.    
As per the recent update, the BFIs can increase or decrease the interest rate by a maximum of 10 per cent in average (except for call deposit) by calculating the average and minimum interest rate of the entire category of the bank released in the previous month.

As per the new provision, Class A banks must fix the interest rate on the basis of the average interest rate of other Class A banks.

For instance, if the average interest rate of 'A' category banks in the previous month was 9 percent, they can charge a maximum interest rate of 9.9 percent with an increment of 10 percent. The new provision is applicable for both the minimum and maximum interest rates.

If the spread rate is more than the given cap, the other rates should be adjusted by making a basis either to the maximum and minimum interest rate.    
Likewise, the NRB has scrapped the provision for BFIs to increase interest rate up to 0.5 percentage points for the deposits except for call deposit and institutional fixed deposit.