Former Governor of Nepal Rastra Bank (NRB), Dr. Chiranjivi Nepal, stated that the central bank’s new monetary policy for the upcoming fiscal year 2025/26 has further reduced interest rates, discouraging savings in banks and promoting investment instead. "Now is not the time to keep money in banks but to invest," he said during an interview with Nepalkhabar's 'Tatkalai'.
The NRB has lowered the bank rate from 6.5% to 6% and the deposit collection rate from 3% to 2.75%, which could reduce savings interest rates by an additional 0.25%. Dr. Nepal warned that this move may discourage those relying on interest income. However, he emphasized that lower interest rates create favorable conditions for investment if the government improves the investment climate.
The policy also aims to boost the stock and real estate markets by increasing loan limits for share collateral and housing loans. Despite concerns over capital flight to India due to higher interest rates there, Dr. Nepal remains optimistic that the new measures will stimulate economic growth if properly implemented.
"On the whole, the monetary policy is flexible and benefits banks, businesses, and the stock market," he added. The NRB has also pledged periodic reviews to adjust policies based on market response.
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