Nepal Rastra Bank has raised lending ceilings for overdraft facilities and microfinance institutions as it seeks to push credit into an economy struggling with excess liquidity.
In the first quarterly review of the monetary policy for fiscal year 2025/26, released on Monday, December 1, the central bank said the limit for personal overdraft loans will rise from Rs 5 million to Rs 10 million. It also said the ceiling for collateral-based loans provided by microfinance institutions will increase from Rs 700,000 to Rs 1.5 million.
The bank had tightened both limits two years ago. It did so under a monetary policy aimed at curbing credit growth and containing risks for low-income borrowers. Those caps have now been relaxed as the financial system faces sustained liquidity pressure.
The review adds that microfinance institutions may revise repayment schedules for borrowers who are struggling to service their loans.
For enterprises and businesses affected by natural disasters, including those in Ilam, banks and financial institutions will be allowed to restructure or reschedule loans once by charging a minimum 10 percent interest rate, the review stated.
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