Fiscal Policy 2018/2019

• Have enhanced access to finance.

 Amendment of Nepal Rastra Bank Act, Insurance Act, Securities Act
• Launch a campaign to open bank accounts.
• Connection of Micro Finance Institutions and Cooperatives with Credit Information Centre.
 Loans without collateral like foreign employment loan, loan for educated but unemployed,
education loan will be covered.
 Defaulters will be prevented from receiving any citizenry facilities
• Government had planned to collaborate with cooperatives and the private sector to make effective
utilization of available capital, skills and capacity
• Loan (on collective guarantee) of up to Rs. 1 million at 5 percent interest subsidy will be provided
for each Dalit community.
 By integrating to run business through cooperatives.
 Provisioned budget for modernizing and promoting traditional skills and occupation.
• Specified grants will be provided to those industries that rely on agricultural raw materials to
produce raw material they need.
• Allocated the budget for agriculture research centers, agriculture cooperatives and agriculture
campuses
 To encourage research and study focused on development of agriculture and animal husbandry.
• Allocated budget for 25 percent subsidy for the acquisition of necessary equipment for milk,
meat, fruit and vegetable processing industries operating through cooperatives.
• Arranged production-based grants to sugarcane farmers, production grants for silk, cotton and
wool farming through cooperatives and 25 percent capital grant for the establishment of
processing industries.
• Factories producing organic fertilizers, chemical fertilizers, pesticides and agriculture equipment
will be established in order to facilitate supply of agricultural inputs in collaboration with
cooperatives and the private sector.
• Seed companies will be enhanced to certify the seed quality and manage the supply system.
• Agriculture cooperatives will be encouraged to produce seeds.
• Herbal and forest-based industries will be established in partnership with public, private,
cooperative and communities.
• Provisioned grant for the purchase of equipment and establishment of export-oriented industries
using forest-based raw materials.
• Arrangements will be made to operate closed and sick industries in the collaboration with the
private sector and cooperatives on the basis of their respective potentialities.
 • Arrangements will be made to establish low-price-shops through cooperative organizations in the
local level.
• Wholesale shops will be established for consumable items to be purchased by cooperative shops.
• Arranged subsidies for getting basic food grains at lower price for the citizens holding national
security identity card.
Monetary Policy 2018/2019
• In order to ensure easy access of all citizens to financial services, priority will be given to
financial inclusion and financial literacy and the use of technology in payment system will be
encouraged
• A provision will be made to widen the scope of the deprived sector credit by including the loan
under the mortgage of educational certificates, loans extended to the deprived and marginalized
sections of the society and students of target group for higher as well as technical and
professional education, and loans provided to Dalit communities for operating businesses under
group guarantee. GoN has provisioned 5 percent interest subsidy on such loans.
• The existing policy for opening branches of the BFIs will be revised to make the banking
services further simplified and accessible. Provision will be made for the BFIs to open branches
without pre-approval of this bank in areas outside the metropolitan and sub-metropolitan cities.
• In order to ensure easy access of all citizens to financial services, priority will be given to
financial inclusion and financial literacy and the use of technology in payment system will be
encouraged
• A provision will be made to widen the scope of the deprived sector credit by including the loan
under the mortgage of educational certificates, loans extended to the deprived and marginalized
sections of the society and students of target group for higher as well as technical and
professional education, and loans provided to Dalit communities for operating businesses under
group guarantee. GoN has provisioned 5 percent interest subsidy on such loans.
• The existing policy for opening branches of the BFIs will be revised to make the banking
services further simplified and accessible. Provision will be made for the BFIs to open branches
without pre-approval of this bank in areas outside the metropolitan and sub-metropolitan cities.
• In the context of supporting the implementation of federalism through financial access and
inclusion, a provision will be made for financial institutions, except operating at the national
level, to adjust their area of operations in line with provincial structure. This is expected to
expand financial access and inclusion.
• A directive was issued requiring commercial banks to open branches in 243 local levels by mid-
May 2018 and additional 116 local levels by mid-July 2018. A relaxation has been made whereby
banks are not required to maintain the CRR and SLR ratios based on the deposit liabilities of
those branches for the next three years.
Provisions for Micro-finance institutions
• Microfinance institutions will also be allowed to mobilize external borrowing up to 25 percent of
their core capital. This is expected to facilitate these institutions in resource mobilization and cost
management
• A policy provision will be made to provide license of payment service provider to the
microfinance institutions. Organizational capacity, number of customers, branch network, capital
and physical infrastructure will be taken as a basis for providing such license.
• Microfinance institutions will be required to compulsorily register in the network of Credit
Information Bureau (CIB). An additional loan loss provision of 2 percentage points will be made
on the loans that are not reported to the CIB.
• Necessary provision will be made to avoid the duplicity regarding the use of credit and other
services from Poverty Alleviation Fund, Rural Self Reliance Fund and Youth Self-Employment
Fund.
• Provision regarding the single obligor limit will be made for the loans extended on the basis of
group guarantee from micro finance institutions.
• The policy of deferring the license to the microfinance institutions has been kept unchanged.
• Necessary policy will be formulated regarding the merger and acquisition of the microfinance
institutions among themselves.
• Provision will be made for offices of the micro finance institutions operating at the village
councils for extending loans up to Rs. 1 million to the persons on group or individual guarantee
for operating micro enterprises by taking acceptable mortgages.
• Provision will be made to record the transaction between the parent company and the micro
finance institution established as a subsidiary of the parent company under related party
transactions.
• Provision will be made for the microfinance institutions allowing them to determine the lending
rate by adding 6 percentage points to their cost of funds in addition to their administrative cost.