Nepal Rastra Bank (NRB) Governor Chiranjibi Nepal claimed that the central monetary authority has been successful in maintaining discipline in Nepal’s financial sector on Friday. He was speaking at a programme organised to mark the 63rd anniversary of the NRB.

“With the introduction of the interest rate corridor, we have been successful in maintaining the interbank lending rate within the base rate,” said Nepal. “This will be helpful for stabilising the interest rate offered by the banks to the borrowers.”

Nepal also said the NRB has been successful in curbing the flow of liquidity in speculative investments by reducing the loan-to-value ratio for credit sought to build or purchase residential houses.

The NRB had introduced the provision whereby those seeking home loan to build or purchase residential houses in the Kathmandu Valley will not get credit in excess of 40 percent of the fair market value of the property. 

“The introduction of the policy has discouraged the investment in unproductive area like real estate and housing and has helped in channeling bank loans toward productive sectors,” said Nepal.

Similarly, the central bank has increased the refinancing fund to Rs19.75 billion from Rs10.48 billion in order to increase subsidized lending towards prioritised areas, according to Nepal.