NAFTA welcomes NRB monetary policy, urges broader relief for all sectors

KATHMANDU: Nepal Foreign Trade Association (NAFTA) has welcomed the monetary policy announced by Nepal Rastra Bank (NRB) for fiscal year 2025/26. The association praised the flexible provisions aimed at reducing interest rates, increasing credit flow and providing relief to banks under stress from non-performing loans.

NAFTA officials noted that by lowering lending rates and expanding access to credit, the policy stands to benefit all stakeholders – government, banks, borrowers and private sector. They expect that easier financing conditions will spur activity on the supply side, with ripple effects across real estate, the stock market, agriculture and small enterprises.

NAFTA applauded NRB’s decision to review the Working Capital Loans Guideline, a long-standing demand of the trade body. However, the association insisted that any revisions should extend relief to every type of business, not only selected sectors, to ensure a level playing field.

The association also welcomed provisions allowing individuals to borrow up to 80% of a property’s value for a first private residence and up to 70% for second and third homes. NAFTA credited the narrowing of the interest-rate corridor with further reducing borrowing costs and boosting private investment in housing and other sectors.

In addition, NAFTA positively viewed the increase in foreign-currency exchange limits for Nepalis travelling abroad and the move to make SAARC-region currencies, including those of Bangladesh and Sri Lanka, fully convertible. The rise in ceilings for margin-based loans was hailed as a catalyst for greater liquidity in the securities market, while the announced review of loan classification and provisioning rules is expected to deliver relief to both banks and their customers.

However, NAFTA highlighted several demands left unaddressed. These include lifting caps on import payments via Delivered at Place (DAP) and inward telegraphic transfers, revising foreign-currency limits for one-off payments for services from abroad, adjusting the calculation of trade-receivable days to start from the payment date, and allowing banks to finance up to 80% of the value of all passenger vehicles. The association also urged permission for import payments via IT after goods arrive at the border but before customs clearance, the removal of restrictions on normally consumable imports to better utilise high foreign-exchange reserves, and the elimination of 3% withholding requirement on funds released after customs clearance.

NAFTA has urged the central bank to address these outstanding issues through upcoming policy reviews, circulars and directives. The association remains optimistic that further collaboration will strengthen Nepal’s trade environment and financial framework in the months ahead.