Nepal Rastra Bank (NRB) announced its monetary policy for fiscal year 2026-27 this week, describing its approach as 'cautiously flexible.' The central bank kept the standing deposit facility rate at 3 percent and the bank rate at 5.75 percent, citing ample liquidity in the banking system and strong foreign exchange reserves as reasons to hold rates steady.
The policy sets a target of facilitating 7 percent GDP growth and projecting inflation at around 5.5 percent, with the government's own inflation ceiling set at 6 percent. The NRB plans to expand bank lending by Rs 652 billion and pledged to maintain foreign exchange reserves sufficient to cover at least seven months of goods and services imports.
Among specific measures, the NRB raised the unsecured loan ceiling for microfinance borrowers to Rs 1.5 million and eased the loan-to-value ratio for large electric vehicles used in public transportation. The central bank also said it would allow viable distressed businesses to restructure operations and would step up monitoring of non-performing loans, which stood at a gross ratio of 5.6 percent across the banking system as of April 2026, with watchlist loans reaching 11.1 percent.