Unofficial Translation

Monetary Policy for
2016/17

Nepal Rastra Bank
Central Office
Baluwatar, Kathmandu

July 2016

Monetary Policy for
2016/17

Delivered by Governor Dr. Chiranjibi Nepal
on 14 July 2016

Nepal Rastra Bank
Central Office
Baluwatar, Kathmandu
www.nrb.org.np

ACRONYMS

BFIs = Banks and Financial Institutions
BOP = Balance of Payments
CBS = Central Bureau of Statistics
CCB1 = Capital Conservation Buffer
CCB2 = Countercyclical Capital Buffer
CCD = Credit to Capital Deposit
CIB = Credit Information Bureau
CPI = Consumer Price Index
CRR = Cash Reserve Ratio
CSD = Central Securities Depository
FSDS = Financial Sector Development Strategy
GDP = Gross Domestic Product
GoN = Government of Nepal
IMF = International Monetary Fund
IC = Indian Currency
INR = Indian Rupee
IRC = Interest Rate Corridor
LC = Letter of Credit
LMFF = Liquidity Monitoring and Forecasting Framework
LOLR = Lender of Last Resort
LTV = Loan to Value
M1 = Narrow Money Supply
M2 = Broad Money Supply
MFIs = Microfinance Institutions
NEPSE = Nepal Stock Exchange
NFRS = Nepal Financial Reporting Standard
NPL = Non Performing Loan
NRB = Nepal Rastra Bank
OMOs = Open Market Operations
OMTOC = Open Market Transaction Operation Committee
PCA = Prompt Corrective Action
RTGS = Real Time Gross Settlement System
SLF = Standing Liquidity Facility
SLR = Statutory Liquidity Ratio
SME = Small and Medium Enterprises
UMP = Unconventional Monetary Policy
USD = US Dollar
y-o-y = year on year

TABLE OF CONTENTS
Page Number

Background 1
World Economic Outlook 1
Review of Economic Situation 2
Review of Monetary and Financial Situation 3
Monetary Policy Framework for 2016/17 6
Monetary Policy Stance 6
Economic and Monetary Targets 7
Operating Targets and Instruments of Monetary Policy 7
Macroprudential Regulation 10
Financial Sector Program for 2016/17 11
Financial Sector Reform 11
Regulation and Supervision 12
Microfinance and Financial Literacy 13
Foreign Exchange Management 14

Appendix 1: Progress Matrix of Policy Targets Outlined in Monetary
Policy for 2015/16 16

Appendix 2: Progress Matrix of Policies and Programs Pertaining to
Financial Sector, Microfinance and Foreign Exchange
Outlined in Monetary Policy for 2015/16 17

Appendix 3: Projection of Monetary Survey 26

Statistical Tables 27

Real estate transactions mildly expanded.8 percent respectively in 2016. macroeconomic stability was intact. formulated following the mandate of the Nepal Rastra Bank (NRB) Act. International Monetary Fund (IMF) projects the world economy to grow by 3. Economic activity remained subdued in 2015/16. the excess liquidity has been managed through open market operations (OMOs). The external outlook takes into account the economic growth of India and China. This is the fifteenth monetary policy in sequence since 2002/03. Inflation in India and China is projected to remain at 5. the agriculture sector did not expand as expected on account of unfavorable weather.1 percent in 2016 and 4. This resulted in inflation higher than targeted. 10.3 percent and 1. The current monetary policy is formulated considering both domestic and external developments. 8.6 percent in 2017. 6. The domestic outlook considers the fiscal stance. World Economic Outlook 7. However.9 percent in 2016. The border disturbance did not allow Nepal to take advantage of lower price of petroleum and metal products in international market along with that of low inflation in neighboring countries. Central banks in developed countries adopted the unconventional monetary policy (UMP) stance in the aftermath of the global financial crisis of 2008. 2.5 percent in 2016. The policy duly considers suggestions from various associations of banks and financial institutions (BFIs). a lower economic growth is expected in 2015/16. Additionally.5 percent in 2017. 4. low level of world economic growth. the need for speedy post-earthquake reconstruction and the decelerating remittance growth.5 percent and 6. 3. Emerging and developing economies are projected to grow by 4. includes the review of monetary policy in the preceding year as well as the rationale and analysis of the proposed programs.2 percent in 2016 and 3. However. weakness in the financial sector and corporate private sector of emerging economies. Government capital spending and the private sector activities were sluggish owing to disturbances in the southern border along with supply disruptions. The monetary policy for 2016/17. Monetary Policy for 2016/17 Background 1. US Federal Reserve . However. 9. It was mainly due to a lower than expected lending growth in the first half of the fiscal year. Inflation in emerging and developing economies is projected to remain at 4. The projected growth of India and China for 2016 is 7. Consequently. 5. federations of industries and commerce as well as other stakeholders. immigration issues in the Europe mainly from the Middle East and Africa and the UK's decision to exit from the Euro through referendum.5 percent respectively. 2002. Banking sector witnessed an excess liquidity from the beginning of the review year. and the share market showed bullish trend. Advanced economies are projected to expand by 1. This is because of the lower price of commodities including petroleum products and metal.

15 billion by the end of 2015/16. consumption. Revenue collection by the Government stood at Rs. 475 billion. This has resulted in a depreciation of the Nepalese currency against the US dollar. Review of Economic Situation 12. CPI inflation surged up to 11. In eleven months of the current fiscal year. 819 billion for 2015/16.1 percent in June 2016.27 billion as on 8 July 2016.25 percentage points in December 2015 after the improvement in job market.15 billion in mid-June 2016. The Federal Reserve.6 percent. 171. which kept interest rate at a lower bound. The level of investment has remained low relative to substantial availability of domestic financial resources for the last few years.40 billion. Of total expenditure.7 percent. the estimates of capital spending and current spending were Rs. In recent years. gross domestic product (GDP) at producer's price is estimated to grow at 0. Similarly. the growth of non-agriculture sector is estimated to remain at 0. 11. Such inflation was at 7. 234. 16. On the basis of the imports trend during .6 percent. 37. This has led to a substantial surplus in current account.2 percent of annual estimates and current spending at 65. Balance of payments (BOP) surplus reached Rs. significantly lower than the targeted growth of 6 percent. 434. The analysis of national income.3 percent.1 percent as of 8 July 2016.77 billion in 2015/16 and the principal repayment was Rs. 13. India and China have also moved towards the dovish stance of monetary policy. The prices of food and beverages group increased by 11. As a result. On y-o-y basis. 17. The growth of agricultural sector is estimated to be 1. 14. This is because of the effect of earthquake and supply disruptions along with the disturbances in border points. GDP growth was 2. This remains substantially higher than the target of 8 months import capacity of goods and services set in the monetary policy for 2015/16. foreign exchange reserves reached Rs. the share of consumption in GDP is 94.11 billion as a result of low expenditure compared to resource mobilization.7 percent.2 percent in the previous year. In 2014/15. The ratio of gross fixed capital formation to GDP is estimated to be 25 percent. 87. As a result of such high BOP surplus. In 2015/16.9 percent and the non-food and services group by 10. savings and investment has shown the mixed trend.5 percent in the review period. increased target range for Fed Fund rate by 0.5 percent.9 percent due to supply disruptions and border disturbance. Government of Nepal (GoN) had announced total budget of Rs.9 percent of GDP due to the expansion of remittance inflows. Total outstanding domestic debt of the Government reached Rs. average consumer price inflation rose to 9. Central banks in Japan and Switzerland have adopted negative interest rate policy and the European Central Bank has continued its policy of keeping interest rate at lower bound. The cash balance of the Government amounted to Rs. The projected annual average inflation for 2015/16 was 8. The contraction in imports resulted in such a substantial surplus in BOP. As a result. which is 91. 50. Capital spending stood at 33. 484 billion respectively.4 percent of the annual target of Rs. 1021. net domestic borrowing amounted to Rs. 15.74 billion in mid-June 2016. In 2015/16. 209 billion and Rs.37 billion in 2015/16. National savings is substantial at 42. the ratio of domestic savings to GDP remains 5. The Government domestic borrowing amounted to Rs.2 Nepal Rastra Bank has started to normalize its stance. 197.3 percent due to the unfavorable weather.

297.03 billion was purchased through the sale of USD 3. 376. 21.14 in mid-July 2015. bank rate and deposit auction are the instruments used by this bank in conducting monetary policy operations. The growth of domestic credit remained below the target due to substantial cash balance in government vault.7 percent. which remains the major source of BOP surplus. remittance inflow in USD terms grew by 1. OMO. Liquidity Management and Interest Rate 23.3 months. The growth of M2 on y-o-y basis was slightly higher at 19 percent in mid-June 2016.3 percent in the corresponding period of the previous year. 18. 26.6 percent on 13 July 2016 from the level of mid-July 2015.95 billion through reverse repo. deposits at BFIs increased by 18.4 percent in 2015/16. Of this.59 billion liquidity through OMOs as of 13 July 2016. 450. 46. Nepalese currency vis-à-vis the USD depreciated by 5. The NRB mopped up Rs. a deceleration in its growth might pose challenge to the economy. OMOs conducted by this bank have multiple objective of managing liquidity. The growth of remittance inflow. . It had depreciated by 5. Private sector credit accelerated moderately after the end of the border disruption. Rs. Indian Currency (IC) equivalent to Rs. the credit to the private sector expanded by 20. Given the role of remittance inflow in maintaining overall macroeconomic stability.54 billion through the net purchase of USD 4.40 billion and Euro 135 million in the review period. 25. domestic credit expanded by 14. 22. 235. 588. 24.10 billion through outright sale auction on a cumulative basis. has been decelerating. steering interest rate.5 billion liquidity was drained through deposit collection auction.04 billion through NRB bond and Rs. 107. Monetary Policy for 2016/17 3 eleven months of the review year. Review of Monetary and Financial Situation Monetary Situation 20. and merchandise and services imports of 14. The decline in numbers of individuals going abroad for employment is likely to affect the remittances going forward. On y-o-y basis.13 on 13 July 2016 compared to Rs. Rs. In eleven months of 2015/16. This was on the back of a significant rise in the net foreign assets (NFA) of the monetary sector. compulsory cash reserve ratio (CRR). On y-o-y basis.8 months.26 billion from the foreign exchange market over a period of mid-July 2015 to 8 July 2016. The exchange rate per USD stood at Rs. The excess reserve of BFIs is taken as an operating target of monetary policy for the last few years. and signaling the stance of monetary policy.5 percent in mid-June 2016. 19. On y-o-y basis. In achieving these objectives. this bank injected net liquidity of Rs. Rs. the existing level of reserves is sufficient for financing merchandise imports of 16. 101. Monetary policy for 2015/16 had projected the broad money supply (M1) growth at 18 percent. Exchange rate stability and liquidity management are the major objectives of foreign exchange market intervention in Nepal. 9.3 percent in mid-June 2016 slightly higher than the projected growth of 20 percent.4 percent in mid-June 2016. Domestic credit was projected to grow by 23.

12 percent and 0. 28. Such facility will be provided for the entire amount of loan up to Rs. Likewise. one year grace period for loans extended to industry. a sum of Rs. 5 billion in this fund and 44 BFIs have expressed commitment to deposit Rs. BFIs can get refinance of such loans at a zero percent interest from this bank. This was further extended to include loans up to Rs. 32.36 percent respectively in mid-June 2016. tourism. tourism and energy related projects. 29. 2. among others. Financial Concessions and Regulatory Relief 30. 100 billion. will provide interest subsidy at 4 percent up to the credit of Rs. In eleven months of 2015/16. The Economic Rehabilitation Fund of Rs. industry and business. Such regulatory reliefs include the relaxation of loan loss provisioning. Policy to extend concessional housing loan to earthquake victims was introduced immediately after the earthquake on 25 April 2015. 31. the weighted average interest rate on 90 days deposit auction was 0. education. health.79 billion.2 points in mid-July 2015. 50 million and. 1.17 billion and such transactions of other financial institutions was Rs. The BFIs used standing liquidity facility (SLF) amounting to Rs.5 million to outside valley residents at a 2 percent concessional interest for reconstruction of houses is to be granted by the BFIs.4 points on 13 July 2016 from 961. reached 1690. 100 million and 2 percent for more than Rs.5 million to inside Kathmandu valley residents and up to Rs. to be operated under this bank. 29. 59 million has been extended as of 23 June 2016. 862. the indicator of the Nepalese share market. Likewise.55 billion in the review period.4 Nepal Rastra Bank 27. The GoN has already earmarked Rs.5 percent.39 percent in mid-March 2016. rescheduling or restructuring of loan for up to one year. . BFIs can extend loan to earthquake victims at a maximum of 5 percent interest for specified business. above that limit. 2015" to minimize the effect of earthquake and border obstruction related supply disturbances on agriculture. 100 million for the loan extended in the specified sectors during the first six months of 2015/16. additional time for accounting interest income. 8. the refinance facility will be provided only up to 20 percent of the excess of such credit amount. The NEPSE index surged mainly due to the issuance of bonus and right share by BFIs aimed at increasing the paid up capital. and bring dynamism in economy. The GoN established the "Economic Rehabilitation Fund (Establishment and Operation). a loan up to Rs. The coupon rate of NRB bond remained 0. the inter bank transactions of commercial banks stood at Rs. Under this scheme. The weighted average interest rate on 91 days treasury bill and inter-bank rate of commercial banks stood at 0. The NEPSE index. 33. commencement of the paperless trading of shares (DEMAT system) from mid-January 2016 and the rise in confidence of investors with an expectation of the end of political transition. The refinance facility can be availed from the Fund at 1. 3 hundred thousand per client by micro-finance institutions (MFIs) against group guarantee. Under this provision.59 billion as of mid-June 2016. 94. The NRB introduced regulatory relief measures in order to boost the credit disbursement from the BFIs and bring dynamism in economic activity in the aftermath of the disastrous earthquake and border disturbance.98 percent. and the extension of trust receipt (import) loan period from 120 days to 180 days. trade.

190 of finance companies and 1. 2014".232 in mid-June 2015. 43.95 million respectively in mid-June 2016. .7 percent in mid-July 2015. the average base rate. Janakpur.851 branches of commercial banks. On average. 39. In order to enhance the stability and consolidate the financial sector. This was 15. Under this provision.8 percent in mid-June 2016. and small and cottage industries. This ratio reached 64.8 percent in 2014/15. this bank's policy of focusing on credit disbursement to the productive sector has resulted in a higher credit growth to agriculture. 40. Likewise. The total number of BFIs stood at 182 including 29 commercial banks ("A" Class).04 percent in the eleventh month of 2015/16. Bhairahawa.99 billion as of mid-April 2016 from BFIs. total credit of Rs. 41. among others. access and literacy. energy. The total number of branches stood at 4. 68 development banks ("B" Class). 1. A total of 2342 farmers obtained loan of Rs. The weighted average interest rate spread and the average base rate of commercial banks were 4. 35. The number of ATM machines was 1. tourism.9 million interest subsidy was provided. financial deepening. 44 finance companies ("C" Class) and 41 microfinance institutions ("D" Class) as of mid-June 2016. 1.647 in mid-June 2016. Rs. 6. Dhangadhi and the Kathmandu Valley. As of mid-May 2016. The number of such BFIs was 195 in the corresponding period of the previous year.219 including 1. population served by per branch of BFIs was 6. 42.859 in mid-June 2016. There has been improvement in deposit mobilization.45 billion has been disbursed under this provision. The weighted average interest rate spread between deposit and lending of commercial banks was 5. energy.6 million and 1. The GoN budget for 2016/17 has lowered the interest on such loan from 6 percent to 5 percent. 37. the regulatory provisions such as legal reform. 38. Despite the economy facing unprecedented situations in 2015/16. Birgunj.4 percent in 2004/05 and 53.330 of MFIs as of mid-June 2016. 41.22 billion and export refinance of Rs. was introduced to provide interest subsidy on loans for the specified agricultural businesses. and tourism. Likewise. 36.69 percent respectively a year ago. Nepalgunj. Monetary Policy for 2016/17 5 Implementation Status of the Financial Programs 34.79 percent and 7. implemented with an objective of making interest rate fixation more transparent. The ratio of private sector credit to GDP was 33. Such credit of commercial banks out of their total loans and advances stood at 16. The coverage of the productive sector loan was expanded by including the loans granted to the organized institutions operating public city transport services in the major cities namely Biratnagar.27 percent in the review month. Private sector credit is increasing as a result of the policies introduced by this bank. Pokhara. capital increase of BFIs and Basel III are being implemented. The number of deposit and loan accounts reached 16. 848 of development banks. 2.5 percent in 2009/10. General refinance of Rs. Such population was 7. The "Manual for Interest Subsidy on Commercial Agriculture Credit to Youths. There is a policy provision for commercial banks to disburse 20 percent of their total credit in the specified productive sector such as agriculture.30 billion was provided in eleven months of 2015/16. was 6. financial sector remained stable.

46. 49. The stance of this policy is made compatible with domestic and international economic outlook. 96 BFIs have merged with each other resulting in the formation of 35 BFIs as of mid-June 2016.26 billion in mid-June 2016. tourism.3 percent in mid-June 2016 from 74. The monetary policy stance also aims at maintaining macroeconomic stability.6 Nepal Rastra Bank 44.93 billion as of mid-June 2016. While designing monetary policy stance. further public issue of shares along with merger and acquisition. 162. Thus. 2011". credit to capital and deposit ratio increased to 76. BFIs' non-performing loan (NPL) has declined.4 percent in mid-June 2015. monetary aggregates will be kept at the desired level. the policy is cautious on potential risk on financial stability that may arise from the expansion of credit to real estate and stock market. 2 hundred thousand. 51. The monetary policy stance is designed to channelize financial resources towards productive sectors such as agriculture. After the introduction of the "Bank and Financial Institutions Merger By-law. 52. 2. 141. 54. 520 million under small and medium businesses. 50. 53. Likewise. Thus. they have been increasing paid up capital through the issuance of bonus shares. attention is given towards minimizing the risk on external sector stability. and objectives as well as priorities of the GoN budget for 2016/17. For this.75 percent from 3. The monetary policy aims at keeping the short-term interest rate at the desired level in order to rein in the volatility in financial market. Consequently. 2. The paid up capital of BFIs reached Rs. Similarly.2 percent a year ago. 2 finance companies were acquired by a commercial bank and 1 development bank was acquired by another development bank. In mid-June 2016. The monetary policy aims at averting any inflationary pressure arising from the demand side on account of the implementation of the reconstruction-led government budget.41 billion has been guaranteed under micro and deprived sector credit guarantee program and Rs. cottage and small industries as well as to the deprived sector. It is expected that the implementation of the government programs for 2016/17 will facilitate to attain the targeted economic growth.60 billion in mid-July 2015. Likewise. the NPL ratio of BFIs decreased to 2. the total credit guaranteed amounts to Rs. total deposits of Rs. BFIs were required to increase paid up capital. As announced in the monetary policy statement for 2015/16. 47.36 billion of 150 BFIs is guaranteed as of mid-June 2016. . right shares. Monetary Policy Framework for 2016/17 Monetary Policy Stance 48. The monetary policy also aims at widening the financial inclusion through literacy and access. emanating from the decelerating remittance growth and possible import rise. Such paid-up capital of BFIs was Rs. As per the provision of insuring bank deposits up to Rs. 45. 318. credit of Rs. energy.

is projected to increase by 20 percent. monetary instruments will be used. which is an intermediate target of monetary policy. price situation and external sector. The counterparties will have . inflation and income elasticity.5 percent as stated in the budget speech of the GoN. The foreign exchange reserves will be maintained to cover imports of goods and services for at least 8 months through monetary and external sector management. 60. The target for inflation is expected to be achieved on the assumption that the buffer stock of sensitive commodities will be maintained. development bank and finance companies as counter-parties as well as the reserve kept by these institutions in excess of the required reserve in this bank as an operating target will be continued. The system of taking commercial bank. inflation in other countries. 59. prevailing in the market prior to two working days. Monetary Policy for 2016/17 7 Economic and Monetary Targets 55. exchange rate and supply chain management will be monitored and analyzed. 64. the broad money growth is targeted at a lower rate than it would have been on the basis of economic growth. 61. Open Market Transactions Operations Committee (OMTOC) will determine repo rate by adding 200 basis points to the weighted average interbank rate. an important component of domestic credit. In the process of implementing the interest rate corridor (IRC). Monetary management will be focused on attaining the economic and monetary goals outlined in this policy statement. The monetary management will be done on the basis of the outlook for economic growth. the consumer price inflation will be contained at 7. Necessary liquidity will be provided to facilitate the targeted economic growth of 6. two weeks' repo rate will be taken as a policy rate. 57. import of such commodities will be increased and necessary action will be taken against those involved in black-marketing and hoarding.. Since price stability remains the primary objective of monetary policy. The interest rate corridor will be introduced and implemented gradually. If needed. 58. The foreign aid and inflow of workers remittance will be monitored continuously to maintain such target. This will help dampen the inflationary pressure from the supply side. This is in tune with the GoN budget for 2016/17. global commodity prices. This will help to stabilize the short term interest rates and modernize the monetary management. The existing currency peg as a nominal anchor of monetary policy will be continued. Operating Target and Instrument of Monetary Policy 62. 63. It is expected that this amount of money growth will assist in achieving growth target and maintaining overall economic stability. Growth in M2.5 percent as announced in the GoN budget for 2016/17. At such a pre-determined rate. The target for domestic credit growth is at 25 percent. the repo tender will be announced for the counterparties to participate in. will be limited to 17 percent. 56. While using monetary instruments to contain inflation at the desired level. Private sector credit. Given the situation of liquidity overhang.

The newly introduced IRC system will be improved gradually on the basis of the experience. 66. The OMTOC will fix deposit collection rate by subtracting 10 basis points from the weighted average interbank rate. The OMTOC will call for deposit collection auction in consistent with the monetary policy objectives as well as liquidity determined by the Liquidity Monitoring and Forecasting Framework (LMFF). Similar to the existing provision. 76. 69. If needed. special refinance facility equivalent to the amount of the exports will be provided at 1 percent interest for Ostrich farming. Statutory Liquidity Ratio (SLR) to be maintained by BFIs remains unchanged. In addition. a provision will be made to compute the CRR on the basis of average weekly domestic currency deposit of exactly two weeks ago. repo. 67. SLF rate will act as an upper bound and the interest rate on two week deposit collection auction rate will act as a lower bound of the corridor. 73. 70. 65. auction allotment will be made on pro-rata basis. Such loan extended by the BFIs will be refinanced by this bank at zero percent interest. The collateral based OMO instruments such as outright sale.8 Nepal Rastra Bank to quote the amount they intend to borrow. The provision for extending loan to earthquake victims at 2 percent interest to rebuild homes has been continued. Likewise. . The maintenance period for CRR is increased from the existing provision of one week to two weeks. hydropower and other specified productive sector. If necessary. 2014 will be used for liquidity management as and when needed. whether the targeted interbank rate remains at lower or upper bound of the corridor. Conducting deposit auction at variable interest rates and issuing NRB Bond at single interest rate is continued as stated in the Open Market Operation Bylaws. 77. reverse repo as mentioned in the Open Market Operation Bylaws. has been kept unchanged at 7 percent. livestock. 71. The general refinance rate has been kept unchanged at 4 percent in order to contribute to overall economic growth by channeling credit flows to commercial farming such as fruit including banana and vegetable farming. fishery. applied for the purpose of lender of last resort (LOLR) facility and discount of securities. prevailing in the market prior to two working days. purchase. Arrangement will be made to mop up excess liquidity through two-week deposit auction. the arrangement to calculate CRR by taking the deposits of BFIs at this bank is continued. LMFF will be revised as per the need. SLF will remain as a window for collateralized liquidity facility up to 5 days. The bank rate. An arrangement to maintain 70 percent of such reserves on daily basis is introduced. 2014. Likewise. 75. auction allotment will be made on pro-rata basis. Interbank rate and two weeks repo rate will remain within the IRC. The Cash Reserve Ratio (CRR) remains unchanged. NRB has been using LMFF in order to measure and forecast excess liquidity of the banking sector. 72. 74. cardamom farming and beekeeping. 68.

Bara. Achham. In case the minimum amount of credit is not extended to the specified productive sector as per the current provision. 79. A provision will be made to include project loan up to Rs. Jumla. Siraha and Saptari. Under this. . Mugu and Baitadi as well as 114 Village Development Committees and 4 Municipalities located in the southern border of Parsa. BFIs will be encouraged to provide additional financial resource to youth receiving such facility from the challenge fund. Such lending of the BFIs will be counted as productive and deprived sector lending. indigenous people. Refinance facility will be provided to establish luxury hotels in areas with tourism development potential. This will ease the credit availability to the missing middle. Dhanusha. the penalty at the bank rate will be charged on the shortfall of such amount of credit from July 2017. Bajhang. foreign employment. The provision of special refinance to BFIs at 1 percent interest to encourage agriculture and small business based income generating activities in poverty stricken areas is continued. those not in the targeted group of the BFIs and financially stronger than the deprived people. Rautahat. The special refinance rate has been kept unchanged at 1 percent in order to promote exports and support sick industries. in the provision requiring development banks and finance companies to lend 15 percent and 10 percent respectively to the specified productive sector is continued. The revision will introduce 5 percent interest subsidy on the loans extended to the youth and small business for the specified commercial agriculture. The budget speech of the GoN for 2016/17 proposes to establish a challenge fund with an objective of providing seed capital to young entrepreneurs. Lamtang. Pathivara. Kalikot. women. 80.25 percent point added to the LIBOR. disadvantaged and minority communities who run small businesses. Doti. These include Bajura. Dalits. 81. Halesi. cottage and small industries. Humla. Monetary Policy for 2016/17 9 78. Under such ratio. 85. 87. In addition. Sarlahi. Swargadwari. A provision which requires commercial banks to allocate 20 percent of total credit to the specified productive sector is continued. Likewise. Upper Mustang. 82. 84. A concessional refinance to encourage exports in foreign currency has also been kept unchanged at the existing rate of 0. 83. Janakpurdham. Rara and Khaptad are indentified as such potential areas. Gadhimai. one million provided by BFIs against the collateral of commercial agriculture project under deprived sector lending. the minimum lending that banks are required to extend to agriculture and hydropower has been increased from 12 percent to 15 percent by mid-July 2017. in addition to simplifying the lending procedure. 86. Maipokhari. Darchula. existing deprived sector lending ratio for the development bank and finance company has been kept unchanged. 2014". person with disabilities. Monitoring the small and medium enterprises (SME) desk at BFIs will be made effective. Mahottari. As mentioned in the GoN budget for 2016/17. The ratio of loan to be extended by the commercial banks to the deprived sector has been kept unchanged at 5 percent. necessary revision will be made to the "Manual on Interest Subsidies on Commercial Agriculture Credit to the Youths. the commercial banks are required to invest minimum 2 percent of the loan directly.

10 Nepal Rastra Bank 88. Monetary Policy Formulation Manual. The provision allowing the BFIs to extend loan including non-fund based facilities to a single borrower. given an arrangement of dynamic provisioning under loan loss provisions. commercial banks should maintain minimum common equity tier 1 capital ratio of 4. 94. Liquidity monitoring framework based on BASEL III will be implemented in commercial banks. In addition to CCB1. the watch list as a loan loss provisioning will be further strengthened and made risk based. This will be introduced in parallel run in national level finance companies. a provision will be made to maintain capital conservation buffer (CCB1) equal to 2. NRB has also been implementing macroprudential measures along with the monetary policy. 95. BFIs failing to maintain such buffer will be allowed to distribute profit only after allocating for capital conservation buffer (CCB1). As per the provision of this Manual. This is to facilitate maintaining financial stability and attaining higher economic growth through channeling credit to the productive sector and maintaining price stability. 2016 has been introduced. based on Basel III requirement. The provision allowing development banks and finance companies to collect financial resources up to 20 times and 15 times respectively of their core capital is kept unchanged. 99. 91.5 percent of total risk weighted assets. there will be a quarterly review of the monetary policy. a provision has been made for banks to maintain an additional counter cyclical buffer (CCB2) up to maximum 2. Commercial banks will be required to maintain the leverage ratio of 4 percent on a quarterly basis beginning mid-July 2016. Likewise. Under the prudential regulation. BASEL II will be fully implemented in national level development banks. the borrowing limit for banks and financial institutions is reduced from one-third to one-fourth of their total deposits. . 92. 96. This will help BFIs to prepare in advance for the possible credit risk.5 percent from mid-July 2016. company or group of related borrowers up to 25 percent of the core capital is kept unchanged. The provision for BFIs to maintain credit to capital-deposit (CCD) ratio at 80 percent remains unchanged. firm. The 25 percent sectoral credit limit. and CCB2. This will make the monetary policy formulation and implementation more systematic and effective. 98. of the total outstanding loan. To minimize the adverse impact of pro-cyclicality and fluctuations in macroeconomic variables on financial sector. The ratio will be reviewed based on the BASEL committee guideline beginning mid-July 2018. 100. 93. In order to enhance the risk absorption capacity of banks by strengthening the capital base. on real estate introduced to minimize the credit risk remains unchanged. Instruments under common equity tier 1 capital will be used for such calculation. PCA. Prompt corrective action (PCA) will be taken on its basis as well. Macroprudential Regulation 89. 97.5 percentage point of total risk weighted assets by mid-July 2017. 90. The existing limit for commercial banks to accept institutional deposit up to 60 percent of total deposit is lowered to 50 percent.

whichever is less. The first generation reform introduced in 1980s commenced the opening up of the sector for private investment and let the market decide the interest rate and portfolio allocation. The provision of single obligor limit of 30 percent of the core capital for extending loan to the productive industries remains unchanged. 113. 111. 106. financial structure development. 1 billion from the existing Rs. and merger and acquisition. 103. The primary objective of the reform at that time was to create a competitive environment in the financial sector. . Loan against the collateral of the promoter share will be extended only up to 50 percent of the calculated value. a new provision is introduced requiring BFIs not to lend more than 20 percent of their core capital against the share collateral of an individual listed company. The limit for converting loans borrowed from multiple banks to consortium financing is increased to Rs. Preserving the reforms so far undertaken. However. The maximum credit limit up to 50 percent of core capital for the construction projects relating to hydropower. 112. 105. The second generation reform is credited for legal reform. The existing credit limit up to 40 percent of total outstanding loan to a single sector is kept unchanged. Monetary Policy for 2016/17 11 101. electricity transmission lines and cable car is kept unchanged. BFIs are allowed to extend loan against the collateral of shares only up to 50 percent of the average closing price for the last 180 days or the prevailing market value. Financial Sector Program for 2016/17 Financial Sector Reform 110. Such ratio in the case of residential housing loan is lowered to 60 percent from the existing 66 percent. remains unchanged. The second stage financial sector reform introduced at the beginning of the last decade prioritized NRB reengineering. by pledging more than 50 percent shares as collateral. The maximum loan-to-value (LTV) ratio for real estate loan is lowered to 50 percent from the existing 60 percent. 500 million. The share value for such purpose will be calculated by taking the 50 percent of the average closing price for the last 180 days or the prevailing market value of ordinary shares. The provision allowing BFIs to extend credit against the collateral of shares only up to the amount of core capital is kept unchanged. 104. 108. whichever is less. Nepal initiated the first generation financial sector reform in 1985. 109. structural reform of the state-owned banks and capacity building of the financial sector. The provision restricting BFIs' promoters holding more than 1 percent shares to borrow. the third generation reform should work on restructuring the financial sector in tune with the changing structure of the economy. capital hike. 102. The major thrust of the second generation reform remains improving corporate governance and strengthening financial sector consolidation. The financial sector needs to develop essential foundation for further reform since the second generation reform is in the final stage. 107. macro prudential regulation.

will be implemented in a sequential manner. In addition. is to ensure the benefits of financial development equitably to all sections of the society and encourage self-regulation and market monitoring. Informant institutions including the BFIs will be required to send the anti-money laundering related details and reports electronically by developing necessary software. In this process. Risk based supervision in the area of anti-money laundering will be implemented gradually on the basis of the national risk evaluation report. BFIs will be required to allocate at least 1 percent of their profit to activities relating to corporate social responsibility. 118. on one hand. 122. BFIs are not required to take prior approval of this bank to relocate bank branches in another area of the same district severely affected by earthquake except the Kathmandu valley. The goal. "Directors Education Program" will be conducted. among others. The guideline to implement the "Nepal Financial Reporting Standard (NFRS)" has already been issued to commercial banks. This will increase awareness of directors of BFIs by incorporating international best practices such as transparency. As per the guideline. 119. BFIs need to inform this bank on such developments. 115. The programs specified in the Financial Sector Development Strategy (FSDS). Necessary arrangements will be made to distribute social security allowance through banks and implement the campaign for opening bank account for all Nepali citizens. . 124. after its approval. 123. Regulation and Supervision 117. BFIs will need to allocate at least 3 percent of total staff spending on capacity building. This will enhance regulation. An arrangement will be made to implement the NFRS in other banks and financial institutions as well. inclusive and strong.12 Nepal Rastra Bank 114. Likewise. 120. on the other. 116. In order to enhance corporate governance and quality of risk management in the entire banking system. the draft relating to the financial statements to be developed by commercial banks has also been prepared. private banks will also be encouraged to open branches in such areas. the compulsory provision for opening bank branches will be made in the districts with low access to finance identified through e-mapping. BFIs are exempted from taking prior approval of this bank to open branches outside Metropolitan and Sub-metropolitan areas and center of municipalities. Financial sector policies and programs are designed to make the sector more competitive. 121. In order to enhance the financial access of common people living in rural and remote areas. disclosure. 125. monitoring and supervision and help combat terrorism financing. Reestablishment of branches of banks displaced during conflict period will be made more effective. conflict of interest and compliance. New guidelines will be issued by identifying the areas for improvement in the process of implementing the NFRS. The establishment of infrastructure development bank jointly with the participation of private sector will be initiated. However.

7 hundred thousand to Rs. Increase in credit limit from Rs. In addition. 3 hundred thousand to Rs. 127. in village development committees where BFIs are not present. 5 hundred thousand for group members classified as good borrowers for the last two years. new software will be introduced for the simplification in payment system through dematerialization of government securities. Mugu. b. the study will be conducted in cooperation with partner institutions on the Real Time Gross Settlement System (RTGS). Micro Finance and Financial Literacy 129. 5 hundred thousand to Rs. 1 million for individuals. Kalikot. up-gradation. among others. An arrangement will be made for the MFIs to maintain maximum of 7 percent spread in excess to their cost of fund while charging interest on loans. Monetary Policy for 2016/17 13 126. The existing minimum limit above which the transactions have to be done through cheque has been reduced from Rs. Increase in limit of micro credit to the deprived or low income individuals against group guarantee for operating micro business from Rs. Necessary revision will be made on "Public Debt Guideline. c. A provision has been made for the national level MFIs providing wholesale lending to maintain minimum paid up capital of Rs. 3 million. e. Increase in credit limit for Solar system and/or Biogas under renewable energy technology from Rs. Increase in credit limit against collateral to deprived and low income people for operating micro business from Rs. 60 thousands to Rs. Jumla. 2 hundred thousand per family. 1 hundred thousand to Rs. The micro credit limit has been revised as follows: a. Increase in credit limit against acceptable collateral from Rs. 3 hundred thousand and such limit is increased from Rs. 133. 130. 60 thousand to Rs. districts with low financial access namely Manang. 3 hundred thousand for the deprived and low income people not associated with any group. 134. d. However. Dolpa. This will make the credit information system more effective and manage multiple banking transactions at MFIs. MFIs will be required to take the membership of the Credit Information Bureau (CIB) of Nepal. Central Securities Depository (CSD) and National Payment Switch/Gateway. a moratorium is imposed on establishing MFIs. Necessary policy provision will be made based on study regarding federal structure and e- mapping. 131. Until the formulation of such policy. 5 million to Rs. In order to modernize and manage the existing payment system. 2003". affiliated or not in groups. 600 million by mid-July 2018. 5 hundred thousand. This will consider the factors such as access to finance. and such limit increased from Rs. Separate policy provision will be made regarding the PCA against MFIs not being able to maintain the specified capital fund. merger/acquisition and operation of MFIs. 128. 3 hundred thousand to Rs. 132. 7 hundred thousand for group members classified under good category for the last two years. Jajarkot. Bajura and Darchula are exempted from this. . Bajhang.

i. Necessary measures will be undertaken to encourage the use of financial services by common people. protect the right of customers and enhance the financial inclusion after the approval of the national financial literacy policy by the GoN. 1. iii.000. A provision will be made to mandatorily update the recording of foreign direct investment at this bank. In the context of growing use of the card. 1. i. An arrangement will be made to obtain information from the licensed individuals/institutions electronically. Foreign Exchange Management 136. 50 million for remittance firm. 100 million from existing Rs. 140. a study will be conducted regarding the provision for allowing exchange facility to money changers through Point of Sale (POS) to foreign tourists who bring and use such cards to get exchange in Nepalese Rupee. Rs. A provision will be made to allow Nepalese citizens having convertible currency account to pay up to USD 15. Rs. 137. Rs. Israel and Australia. 5 hundred thousand for money changers involving in purchase/sale of Indian currency kept unchanged. The existing limit to purchase software from India in convertible currency will be increased from USD 10. This will facilitate those submitting transaction records to this bank.000 to USD 15. 145.000 per annum for the purchase of goods and services from their foreign currency account. 141. company or institution acting as an agent of foreign principal company. 20 million from existing Rs. 138. 144.0 million from existing level of Rs. Minimum paid up capital for institutions involving in money changer business has been increased as follows. Rs. 2. 1. Rs.000 each time. .14 Nepal Rastra Bank 135. iii.5 million for those involved in the transactions of Indian currency as well as convertible foreign currency. 250 million for companies issuing remittance card.0 million for the money changer purchasing convertible foreign currency. A policy will be formulated to encourage inward remittance through banking system from countries such as Korea. A provision has been made for institutions involving in remittance business to gradually maintain the following level of minimum paid up capital. ii.000 to USD 50. company or institution acting as a principal company. 143. 142. among others. a provision will be made to quote both buying and selling rate of those currency for which only selling rate is specified in the existing provision.5 million from the existing level of Rs. The provision of making payment for imports from third country (except India) through draft/TT will be increased from a maximum amount of USD 40. 139. 10 million for remittance firm. ii. Considering the demand for convertible currency. Rs.

148. Finally. the offices of the sales agent located abroad and remittance companies. 149. The economy is expected to take momentum in the days to come as signaled by the recent revival in economic activities. professional associations of industrial and trade sectors. The NRB expects continued cooperation from all the stakeholders in implementing policy programs as envisioned in the monetary policy statement. it is expected that the implementation of this policy will be helpful in maintaining macroeconomic stability and achieving the growth target. 151. Awareness campaign will be launched to promote the sale of foreign employment savings bond. Such campaign will be conducted in countries where a large number of Nepalese are in employment. However. The awareness campaign will be conducted in coordination with the concerned bodies of the GoN. BFIs. academicians and media for their cooperation in formulating this policy. This policy for 2016/17 is brought out in line with economic targets set in the GoN budget. there is a need to conduct monetary management cautiously in order to minimize the potential risk in financial and external sector that may arise from the fluctuation in the remittance inflow. there still remains a challenge to balance monetary management in order to avoid the price pressure expected to arise from the implementation of the reconstruction-led GoN budget. Monetary Policy for 2016/17 15 146. 147. Foreign citizens working in Nepal with labor permit will be allowed to send their quoted remuneration directly in convertible currency to third countries through BFIs after submitting necessary documents. In the context of the improvement observed in bank lending. 150. Other existing provisions relating to the foreign exchange are kept unchanged. The NRB would like to thank all the concerned stakeholders including the GoN and its various agencies. donor agencies. . Similarly.

June 2016. 52 Maintaining foreign exchange reserve sufficient to cover The foreign exchange reserve stood at Rs. 2015/16. . Objectives/Programs Implementation Status 1. of last resort as well as for the discount of securities. 4.3 percent 2015/16. 5. in June 2016. 52 Containing annual average CPI inflation rate to 8. 2. 53 The growth rate of broad money will be contained within On y-o-y basis.4 growth of 6 percent as mentioned in the budget for percent in June 2016. 52 Managing necessary liquidity to support the economic On y-o-y basis. the policy rate for the purpose of the lender Circular issued on 6 August 2015. 1021. 3. Point No. 54 Private sector credit is projected to grow by 20 percent in On y-o-y basis.74 import of goods and services for at least 8 months. will be reduced by 1 percentage point to 7 percent.N. 58 The bank rate. months of 2015/16. Such reserve is estimated to cover import of goods and services for about 14 months by the end of 2015/16. total domestic credit increased 14.16 Nepal Rastra Bank Appendix 1 Progress Matrix of Targets Outlined in Monetary Policy for 2015/16 S.9 percent during 11 in 2015/16. billion in mid-June 2016. private sector credit grew 20. 6. broad money increased 19 percent in 18 percent.5 percent Average inflation rate stood at 9.

namely. and representatives from industry. Point No.N. 61 With a view to encouraging BFIs to extend loans to agriculture Circular issued on 18 August 2015. Mahottari. 59 million has been utilized by 23 June 2016. tourism. 59 Emphasis to be given on effective implementation of earthquake "Manual for Refinancing to Earthquake Affected Households victim loan to construct houses. Darchula. Jumla. Objectives/Programs Implementation Status 1. Mugu and Baitadi. irrigation office. In order to general refinance. seed company. Doti. 1. Rautahat. 3 zero percent interest from this bank. Kalikot. Financial Sector and small business based income generating activities in Coordination Committee established at outside valley offices of poverty stricken areas of the country. Committee. Bajura. refinance facility at 1 percent interest to be made. Microfinance and Foreign Exchange Outlined in Monetary Policy for 2015/16 S. 3. hundred thousand against group guarantee. among others. 2015" was revised in Kathmandu valley residents and up to Rs. special refinance and export refinance promote the demand side. Areas include the districts with high poverty incidence. Bajhang. has been formed at the regional level including the members from banks and financial institutions. Under this provision. 2. 2. energy and insurance. agricultural input company. Monetary Policy for 2016/17 17 Appendix 2 Progress Matrix of Policies and Programs Pertaining to Financial Sector. Financial Sector Coordination provided by this bank. Bara. refinance facility of Rs. . up to Rs. chaired by director of the outside valley offices of this bank.5 million to outside order to provide refinance facility at zero percent interest rate valley residents to be provided at a 2 percent interest rate by the even to MFIs for the loan extended to earthquake affected BFIs and refinance facility to the BFIs extending such loan at households for residential house reconstruction up to Rs. Siraha and Saptari located in the southern border with relatively higher intensity of poverty. 60 Special emphasis to be given to make credit supply including General refinance of Rs. agricultural development office.22 billion and export refinance of demand side more effective in order to expand the use of Rs.3 billion has been utilized by 14 June 2016. a provision of special this bank made active. Achham. This facility also covers 114 Village Development Committees and 4 Municipalities of Parsa. Humla. 1. federation of industry and commerce. Sarlahi. Dhanusha. 6.5 million to inside for Residential House Reconstruction.

00 billion on 6 insufficient to mop up the high volume of liquidity.21 billion on 10 July 2016. GoN. the Nepal Rastra Bank can issue maturity issued. infrastructure bank can be established entirely with domestic investment or jointly with foreign investors. Rs. Bank and Financial Institutions Act (BAFIA) is bank to work on the infrastructure development sector. 64 Since the prevailing excess liquidity in recent period seems to Nepal Rastra Bank Bond of Rs. 62 The regular. institutions in the Nepalese currency. and the minimum paid up capital of such bank will be of Rs. if necessary. 10. the deposit auction for a period of conducted to mop-up structural liquidity. 10. 7. will be implemented sequentially for maintaining Finance.00 billion on 29 May bond if the government bonds held by this bank become 2016. 10. 63 If the BFIs invest in bonds issued by international financial Circular issued on 18 August 2015. . of bank and financial institutions. such bonds to be put under the list of eligible assets for open market operations and SLF borrowing. This is to make liquidity be revised to make liquidity measurement and forecasting more monitoring and forecasting more realistic. the existing LMFF to required for daily transactions. In addition. 8. 66 Financial Sector Development Strategy (FSDS). 5. 9. And. In under revision in the parliament and additional arrangement in addition to other provisions specified by this bank. fine-tuning. expanding financial access and inclusion. financial stability. after the institutions to be reviewed as per the need after the study of the completion of ongoing e-mapping for the location of branches existing policy.N. these securities to be made eligible for maintaining the SLR. the this matter will be made after the amendment in the Act. Objectives/Programs Implementation Status 4. Point No. 65 As the excess liquidity of the banking sector is used as an The LMFF has incorporated the trend. Rs. Three months' deposit auction active and effective. 7.04 billion with one year be of medium-term nature. 68 A special policy provision to be made in order to provide the A task force has been formed to make special policy license for the establishment of a national level infrastructure arrangement. Rs. 6. and structural OMOs will be Given the liquidity situation.00 billion on 26 June 2016. 10. 46. the regular and fine-tuning OMOs conducted as per the nature of the liquidity to make OMO more for mopping-up liquidity upheld. Rs. three-months introduced in the last year to be continued. 67 The existing licensing policy for opening bank and financial The licensing policy will be reviewed. after its Draft of the Strategy has been submitted to Ministry of approval. realistic.83 billion on 13 July 2016. 8. 20 billion. This include Rs.18 Nepal Rastra Bank S. July 2016. seasonality and liquidity operating target of the monetary policy. enhancing competition and promoting corporate governance.

13. Dhangadhi and the Kathmandu Valley. Pokhara. Nepalgunj. provide refinance facility and interest subsidy to the earthquake 2015 approved by the GoN on 5 January 2016.45 billion. sector loan by including the loans granted to the organized 2. 69 BFIs to be required to increase the minimum paid up capital in Circular issued on 6 August 2015. institutions operating public city transport services in the major disbursed to this sector as of mid-May 2016. affected residential homes. Bank and financial order to promote the financial stability and mobilize the institutions have submitted their capital plan to increase paid- resources needed for the long-term development. branches in certain areas of the country. the mapping of the financial access situation will be carried out. These areas include 114 Village Development Committees and 4 municipalities of Parsa. and tourism. the branchless banking and the mobile banking services will be encouraged in the geographical region with low financial access. right shares and further public offerings. A loan amounting to Rs. cities namely Biratnagar. account for each household’ announced in the government’s budget and the provision of cash transfer by the state through the bank account. Bhairahawa. Point No. 71 A provision to be made to expand the coverage of productive Circular issued on 18 August 2015.N. Mahottari. up capital through merger/acquisition. 14. Dhanusha. 10 previously specified districts with higher level of poverty in the hilly region. among others. Bara. 70 BFIs will not require the prior approval of this bank to open Circular issued on 18 August 2015. Objectives/Programs Implementation Status 11. to be counted under productive sector lending. Sarlahi. except Kathmandu valley. Birgunj. 15. agricultural occupation. Economic Circular issued on 24 January 2016 in line with the Economic Rehabilitation Fund to be operated by this bank in order to Rehabilitation Fund (Establishment and Operation) Manual. Monetary Policy for 2016/17 19 S. and issuing bonus shares. Janakpur. The establishment of the microfinance institutions. Rautahat. 72 In order to assist the campaign of opening ‘at least one bank Under implementation. the branch expansion of the existing institutions. 12. 73 As announced in the government’s budget speech. Siraha and Saptari districts adjoining the southern border having relatively high severity of poverty. and districts severely affected by the earthquake. .

N. 21. 76 A provision to be made for the BFIs which require to allocate a Preliminary discussion conducted regarding the issuance of certain percent of their profit for corporate social directives after study on the international practices of the responsibilities as well as to engage more actively in their corporate responsibilities and human resource development. 78 Establishment of the RTGS system to be pushed ahead with the An agreement with the UKaid Sakchyam for technical support objectives of rendering effective service to the customers and has been made in December 2015 to establish RTGS. 75 In order to encourage the commercial farming and livestock. Point No. 79 Provision for continuous regulation and supervision to be made Observation. services.20 Nepal Rastra Bank S. by the BFIs while guaranteeing the deposit in order to increase the existing limit of deposit guarantee of small depositors. a provision to be made whereby the BFIs on the basis of repayment capacity of borrowers can extend loan up to Rs.99 billion loan disbursed and Rs 41. 74 The provision of subsidized loan to the agriculture sector Agriculture Credit Monitoring and Coordination Committee introduced in the budget of 2014/15 will be continued and the has recommended Ministry of Finance to revise the manual in lending process of such loan will be further simplified in order order to provide interest subsidy to the loan up to Rs. Objectives/Programs Implementation Status 16. 1 million against the collateral of arable land that is not linked to roads 18. turmeric and olive as well. human resource development. small and medium sized enterprises as well as the income generating activities in the earthquake affected areas. 17. making BFIs’ liquidity management easier. coffee. 19. Settlement Bylaw 2015. 1. 79 Institutions and mechanisms operating payment and settlement Draft of the payment and settlement licensing policy approved services but not under the regulatory and supervisory purview of by the board of directors of this bank is in the process of this bank to be licensed by implementing the Payment and implementation. 22. 77 Initiatives will be taken to review the existing charges to be paid Necessary consultation with the GoN in the process. Circular issued on 6 August 2015. supervision and monitoring of the institutions will of the instruments and services issued by the be put into action after the approval of Licensing and Oversight institutions/mechanisms operating payment and settlement Policy. 1 million to enhance the access of small and medium farmers.9 million interest subsidies provided as of mid-April 2016. . Rs. 20. provided against group guarantee and include the farming of tea.

500 million into consortium loan by mid-July 2016. In addition. Commercial banks. Objectives/Programs Implementation Status 23. banks and an arrangement made to implement it in other banks as well. and identifying risks in a timely manner will be made more Stress test implemented in national level development effective.5 percentage point.46 . increased by 0. 85 Multi-bank borrowing above certain amount will be Circular issued on 15 November 2015. 2015 based on provisions of The provisions relating to the capital fund will be implemented BASEL-III was in parallel run in commercial banks since in commercial banks in accordance with the schedule of December 2015 and Circular has been issued on 4 January gradually implementing provisions relating to BASEL-III. 26. supervision forward looking. the development banks and finance companies have disbursed 5. 81 As the NFRS Migration Guidelines to BFIs has already been Draft under progress. 80 Formulation and implementation of Contingency Management Circular issued on 15 November 2015. 24. As per the circular. (b) Daily liquidity in development banks monitored regularly. 30. 27. strengthening off-site supervision. As per the provision. 28. an compulsorily converted into consortium loan. 82 Capital Adequacy Framework. 86 The deprived sector lending requirement for BFIs will be Circular issued on 6 August 2015. 29. license. Monetary Policy for 2016/17 21 S. issued in line with the plan of implementing NFRS gradually in BFIs. the required financial statements and the draft of new directive to be finalized and implemented accordingly. arrangement has been made to convert loan from multiple banks above Rs. (c) Stress Test implemented in national level finance companies at departmental level. daily liquidity of finance companies monitored. 85 Loan project including the borrowers of consortium loan above In the context that only one credit rating agency is currently in certain amount will be compulsorily credit rated to minimize the operation and another agency is in the process of getting credit risk. commercial banks in addition to issuing necessary directive to implement BASEL-III based on liquidity monitoring system. Framework will be made mandatory for BFIs to support the business continuity process in the times of the natural disaster and similar other events. 2016 to make full-fledged implementation from mid July 2016. the discussion has been done to issue circular only after the operation of such new agency.N. 25. 83 PCA will be implemented on the basis of liquidity in Draft is under discussion. Point No. 84 The Early Warning System (EWS) aimed at making bank (a) Commercial banks monitored regularly.

92 Group members who have been using deprived sector lending Circular issued on 6 August 2015. 6. Point No. 91 In order to avoid the duplication of micro-finance services. new Necessary measuress will be taken after the completion of the microfinance institutions will be licensed only in the financial e-Mapping.3 percent respectively of their total development banks 4. percent of their total loan in the deprived sector.000. Credit Information Bureau of Nepal will be made more effective. 90 The goAML Software installed to strengthen the information The goAML software has been installed and Financial mechanism relating to financial information will be made Information Unit (FIU) and some Informant Institutions have accessible to the 'Informant Institutions'. 87 The existing 'Magnetic Strip Card' along with debit. the task of purchasing necessary hardware is in the process for operating goAML software 36. 32. 700. 88 Banks will be defined as the 'Systematically Important Banks Setting standards for defining 'Systematically Important Banks (SIBs)' on the basis of their effect on the overall financial (SIBs)' is in progress. service deficient areas and they will be permitted to expand their branches only in the areas where presence of such institutions is low. Objectives/Programs Implementation Status commercial banks to be required to disburse 5 percent.0 loan to the deprived sector as of mid-April 2016. been involved in customization in order to use the software. prepaid cards will be replaced by the 'Chip Based Card' by mid- October 2015 to ensure security to customers on the usage of banking services by minimizing the operational risk.5 percent and finance companies 4. 34.000 to Rs.000 . 31. increased from Rs. 38. 37. 200. from the MFIs for the last two years and categorized as good borrowers will be entitled to borrow up to Rs. 86 The deprived sector lending will be redefined by including the Circular issued on 15 November 2015. 500. 300. system and additional standards will be set to regulate and supervise such banks. 35. credit and Circular issued on 18 August 2015. commercial agriculture lending.22 Nepal Rastra Bank S. Likewise.000 up from the existing limit of Rs. percent. 33.35 percent and 4.N. 92 The limit of collateral based micro enterprise credit will be Circular issued on 6 August 2015. 89 Provision of credit information dissemination by the BFIs to the Information has been disseminated regularly.

47. financial literacy in informal education. 42. protect the customer's right using financial services and widen the financial inclusion. require to maintain a certain spread between their cost of fund and lending rates. converting financial non-government institutions licensed by this bank into to "D" class MFIs has been extended until mid- January 2016 45. 100 In order to broaden the area and scope of the foreign exchange Study under progress. 96 Considering the difficult time after earthquake. GoN. 99 The process of transferring remittance from India will be made A proposal has been sent to the Reserve Bank of India for the simple and easier by solving the existing difficulties. . regulating and supervising the increasing number of saving and credit cooperatives and micro credit institutions will be submitted to the government. Monetary Policy for 2016/17 23 S. 95 A draft of the Act for the establishment of a strong institution Draft Act prepared. the diversification and expansion of such investment will be made after studying the possibilities of the foreign exchange investment in SAARC countries. 40. 94 MFIs will be encouraged to go for merger and acquisition. implemented to promote the use of financial services. formation of 'Joint Technical Committee'. investment. Objectives/Programs Implementation Status 39. the deadline for Circular issued on 6 August 2015. as announced in the budget speech of the government 44.N. 97 National financial literacy policy will be formulated and The policy has been submitted to the GoN for approval. Under discussion. 48. 94 A provision will be made for MFIs under which the MFIs Necessary study is being conducted. vocational training and school level curriculum. 41. allocating a certain percent of their profit for the group welfare of the borrowers and institutional development. Point No. 98 Necessary coordination will be made with the Government of Necessary co-ordination is being done with the Ministry of Nepal and other stakeholders to gradually include the content of Education. 93 Provision will be made for MFIs to establish a separate fund by Circular issued on 10 November 2015. 46. will be increased. 94 The paid up capital of the Micro Finance Institutions (MFIs) Under discussion. 43.

policy provisions after conducting a study. 51.N. Objectives/Programs Implementation Status 49. 55. GoN. necessary revisions will be made on the existing Import and Distribution Guidelines 2011. 102 In order to make the gold/silver imports and distribution A report prepared by the sub-committee. country (except India) through draft/TT will be increased from a maximum amount of USD 35. of this bank for controlling the illegal transactions of foreign exchange and silver/gold will be mobilized effectively. This amount will be counted as investment along with other investment inflow after the completion of the firm registration at the Company Registrar’s Office. 54. 104 The foreign investors desiring to operate business fully under Circular issued on 14 August 2015. 50. The tour operator can request up to USD 500 for such exchange facilities to make payment in Tibet by incorporating the VAT invoice of certain expenses made by the tourists in the Nepalese hotel and the proof of the transfer of Indian currency through the banking channel. Nepalese tour operators will be given exchange facilities of convertible foreign currencies. . is under discussion. commercial banks based on their monthly transactions to maintain the stock of Indian currency for making payment of commercial and card transactions. 105 The provision of making payment for imports from third Circular issued on 3 August 2015.000 each time. economy into the global financial market.000 to USD 40. 52. additional measures relating to capital account convertibility will be undertaken after amendment in the Foreign Exchange Regulation Act and the Act Restricting Investment Abroad. their own investment will be allowed to bring the registration fee and other reasonable preliminary expenses through banking channel. 106 Indian tourist travelling to Mansarobar Kailash through Circular issued on 23 August 2015.24 Nepal Rastra Bank S. Point No. 107 INR exchange facility required for a week will be provided to Circular issued on 3 August 2015. 101 The high level mechanism formed recently under the initiation Under continuous implementation. 103 To provide timely revisions in the capital account convertibility A draft of the Act has been submitted to the Ministry of in the context of the increasing integration of the national Finance. 53. formed to revise Gold effective.

companies. Monetary Policy for 2016/17 25 S. 111 The existing provision of providing license of foreign exchange Necessary revisions have been made to Nepal Rastra Bank transactions to the hotels and travel-tour operators located in the Foreign Exchange Transaction Licensing and Supervision remote areas will be further simplified.000.000 from the existing INR 50.000 in a year from foreign companies. the payment at the convertible foreign currency will be updated by including additional commodities in consultation with the stakeholders. . Market intervention through both process by this bank will be automated. 57.N. unavailability of recommendations from such agencies. 112 The limit of the exchange facility in INR to the Indian transport Circular issued on 3 August 2015. 59. processes in parallel run. 109 The purchase/sale of the USD and the market intervention Automation completed. 108 The list of products that can be imported from India by making Discussion going on with stakeholders. provision of taking prior approval from this bank will be made for the foreign exchange facility if the Nepalese companies take consulting services of more than USD 50. Objectives/Programs Implementation Status 56. 58. 110 In case of the absence of the regulatory agencies or Circular issued on 12 August 2015. bylaws 2011. Point No. will be increased to INR 75. which transport goods from India to Nepal or from Nepal to India and third countries. 60.

9 1141564.0 -8.26 Nepal Rastra Bank Appendix-3 Projection of Monetary Survey (Rs.2 105.0 245874.7 20.8 20.1 58361.8 1972197.6 657722.2 172000.9 1527344.2 Net Non-Monetary Liabilities 347557.5 330414.0 2246624.4 2.1 81572.1 9.6 3259.1 175960.2 25.4 1.2 1956741.9 20.6 15.0 232410.7 94395.8 16.0 d.8 10201.0 a.3 14.5 127211.2 22.6 -19.2 Time Deposits 435793.8 275209.0 10312.2 17.0 23.2 14342.4 16.8 502737.7 14081.0 232410.1 1622874.0 211189.9 14260.3 18.2 8.0 16.2 166392.9 24.0 94293.5 16087.2 -316.1 4. in million) 2014 2015 2016 2017 Annual Change Monetary Aggregates Jul Jul Jul P Jul Proj 2014/15 2015/16 2016/17 Amount Percent Amount Percent Amount Percent 1/ 2/ 1.0 1/ 2/ 2.0 1655782.8 Government 1487.4 24.5 67591. 3031.8 21.0 5472.6 114472.3 328879.0 424744.1 1293995.2 Government Deposits 23500.2 269387.2 Foreign Liabilities 87539.5 a.0 1055061.9 14605.7 747287.0 847679.0 15.0 18.2 326177.4 -13852.0 -1490. Broad Money (M2) 1565967.4 19. Net Claims on Government 141989.3 166798.0 c. Claims on Non-Financial Government Enterprises 10417.0 24.0 0.2 b.9 13980.3 119.5 42543.6 35932.9 119051.0 Claims on Government 165490.7 223120.9 46241.6 109000.2 17.2 3242.3 1301.1 17.6 13.6 -80000.7 20.9 160920.1 3. Foreign Assets. Claims on Private Sector 1150824.7 38.8 2614463.8 18.9 12827.4 -10.4 1.6 154664.3 18.0 23.7 190260.6 21.0 305482.7 951303.9 3408.4 million .5 16553.1 65959.5 2234583.9 356782.0 3450.5 603986.0 20.6 449892.9 P:Provisional Proj: Projection 1/ Adjusting the exchange valuation gain of Rs.6 125554.7 32334.2 12852.6 131064.1 Domestic Credit 1314304.0 7.3 2.0 Demand Deposits 127292.0 16591.7 1.8 -2.1 321.6 19.0 51000.4 27371. Other 7486.7 1352754.9 -524.4 207382.2 20.6 b.3 161024.3 19.0 583325.5 11728.3 184782.5 3.9 136.7 million 2/ Adjusting the exchange valuation gain of Rs.8 396432.6 509693.8 371387.5 12.7 145035. Saving and Call Deposits 775343.7 991588.3 19.1 80000. Net Domestic Assets 966747.4 2740017.0 5510.4 281837. Money Supply (M1) 354830.7 1/ 2/ 2.3 19.2 -4465. Broad Money Liquidity (M3) 1646019.5 193359.6 16.9 17.5 18. Claims on Financial Institutions 11073.1 Money Supply (M1+) 1130173.8 4.6 -3.1 21.7 1376048.0 14.5 Currency 227537.3 213040.0 5.0 623749.3 25.0 0.1 -10. Net 599219. Deposits 80052.7 84948.4 270080.3 43.2 -14778.0 3. 21301.9 46186.0 1.2 5014.5 501753.6 1986196.8 21.9 27.3 202324.5 15.5 6.1 1877801.1 Foreign Assets 686759.3 84604.9 17710.3 74396.0 379879.6 5996.3 401662.4 17.0 1772.0 b.4 1130514.1 148.0 100.3 45.5 1651258.7 73220.2 Non-government 9585.8 69914.3 121013.4 343301.5 42.6 14.8 33813.6 396830.0 279.9 1796732.5 a.4 113359.0 311834.4 1122652.0 -100.6 1373945.0 33.1 2343584.5 20.8 1153.7 1.0 105.3 940588.3 1.5 10307.1 39051.8 17388.3 10100.3 100391.

List of Tables Table 1 Gross Domestic Product (at 2000/01 prices) Table 2 Gross Domestic Product (at current prices) Table 3 Gross National Disposable Income and Saving (at current prices) Table 4 National Consumer Price Index (2014/15=100) Table 5 Monetary Survey Table 6 Monetary Survey (Year on Year) Table 7 Structure of Interest Rates Table 8 Outright Sale and Purchase Auction Table 9 Repo and Reverse Repo Auction Table 10 Deposit Collection Auction Table 11 Government Budgetary Operation (on cash basis) Table 12 Outstanding Domestic Debt of the GoN Table 13 Net Domestic Borrowing of the GoN Table 14 Direction of Foreign Trade Table 15 Balance of Payments Situation Table 16 Gross Foreign Assets of the Banking Sector Table 17 Foreign Exchange Intervention .

8 4.1 6.0 50346.8 27415.7 Health and Social Work 9011.4 5.5 703056.1 465534.0 48391.7 0.8 3780.7 1.7 10471.7 2.9 8.3 0.6 28722.8 Education 39799.8 336762.8 44504.7 357694.5 11605.6 51626.7 5.5 9.3 93918.1 6.3 0.4 759914.9 -1.2 8.4 74806.8 Taxes less subsidies on products 52160.2 14730.5 -0.6 5.5 100733.8 5.4 48067.7 Public Administration and Defence 10806.2 5.1 1.0 11.5 29571.7 6.3 3.1 29977.Preliminary Estimate Source: Central Bureau of Statistics .4 224730.1 7.6 5.6 12594.8 9591.2 3.8 6.5 28626.0 2.8 416631.6 102526.0 13848.3 68984.4 41064.0 66915.5 8.7 15366.1 11.5 0.5 GDP at producers price 639694.9 26162.7 6. in million Percentage Change Sectors 2010/11 2011/12 2012/13 2013/14 2014/15 R 2015/16 P 2011/12 2012/13 2013/14 2014/15 R 2015/16 P Agriculture 214786.9 4.0 95900.0 Service 303319.8 60183.0 2.8 1.2 12803.7 31655.6 37207. Storage and Communications 57504.7 98111.4 237521.3 Real Estate.2 12391.2 739754.6 54889.3 482915.0 2.9 3. Gas and Water 13564.1 2.8 3. Renting and Business 48894.8 94821.7 42766.1 4.6 15212.0 14690.5 7.3 695190.1 4.6 3159.2 12418.1 Fishery 3515.3 725556.9 3.4 3233.2 7.1 4.6 3883.2 6.2 641361.2 55313.1 0.4 4.2 4073.7 6.9 4.4 2.3 3.8 3.3 Agriculture and Forestry 211270.4 70420.6 Industry 95249.5 5.9 -4.9 239457.5 -6.6 Total GVA including FISIM 613355.7 4.4 57373.7 4362.8 46646.6 28829.Revised Estimate P .9 7.2 11000.7 43329.1 109433.0 5.6 4.6 479915.1 2.5 370481.8 4.4 3.4 5.6 2.5 637770.1 3.8 5.5 2.7 Wholesale and Retail Trade 76297.2 233448.3 65527.6 664689.0 3.2 235094.9 2.6 3.1 10020.7 5.3 Mining and Quarrying 2637.4 -9.2 41579.0 4.4 437496.2 55642.9 Electricity.7 7.4 13091.4 4.3 10.9 26825.5 237764.9 30365.0 -1.6 3.7 7.5 10.7 11822.7 2824.0 6.1 318519.2 3.6 223310.8 Transport.7 2.7 45058.4 3.0 62160.1 Hotels and Restaurant 10244.5 0.5 0.2 8.8 3.7 70066.6 R .8 78966.7 6.6 Financial Intermediation 26163.8 3.7 764174.0 38119.9 614636.6 1.5 5.6 3.3 -6.0 242640.6 11570.7 Construction 37125.3 0.4 107840.3 3021.3 0.28 Nepal Rastra Bank Table 1 Gross Domestic Product (at 2000/01 prices ) Rs.8 84693.8 GDP at basic prices 587533.9 2.3 227193.6 220949.0 27070.4 5.7 380389.3 42018.1 670279.9 674226.0 5.5 4.9 Financial Intermediation Indirectly Measured ( FISIM) 25821.7 689848. Social and Personal Service 24598.6 0.2 3.9 6.4 697954.8 2.7 5.0 27817.1 -1.1 2769.9 47888.4 0.5 3.5 12183.2 2.0 5.5 6.7 8.3 -4.5 76714.4 26725.6 1.9 43444.2 52960.1 11202.3 1.8 4.5 4875.5 Manufacturing 41922.5 719372.2 15111.9 Other Community.8 29523.1 26918.8 Non-Agriculture 398568.8 4.5 7.9 4.2 2.

90 21215.0 12.6 9.68 651468.36 91163.91 13.00 122354.46 8166.8 Education 67739.15 81796.8 12.81 585951. Gas and Water 16001.6 9.0 10.55 231060.34 10487.9 25.3 2.92 534514.96 166946.3 7.02 661956.9 6.43 118980.45 73541.2 15.45 89959.12 229871.9 3.9 7.58 2120470.69 115565.1 GDP at basic prices 1248482.2 27.1 4.6 Public Administration and Defence 24830.0 7.35 291764.1 15.38 288676.31 20.32 955838.05 98539.4 21.08 11874.43 43485.92 63434.21 271724.09 9568.51 17.26 140735.10 1964539.21 152983.46 10.17 2088681.00 23.34 1822172.0 15.0 10.39 112995.4 13.81 805989.0 12.91 27725.66 17518.4 10.36 155764.15 1426725.95 15.27 1387481.44 44324.80 19.9 6.7 11.00 109487.7 12.90 169789.65 11.2 12.59 18.2 20.57 1695011.12 58528. Preliminary Estimate Source: Central Bureau of Statistics .68 205801.00 6646.6 18.7 8. Storage and Communications 105834.11 623567.83 115253.0 4.66 1338459.2 13.7 5.08 143771.2 4.80 11003.56 91565.29 79362.Revised Estimate P .60 292808.35 9.47 1437473.0 5.23 55204.9 Hotels and Restaurant 21057.9 15.70 62183.8 6.86 123213.4 9.74 55461.18 141151.2 Manufacturing 80531.3 7.2 9.99 54397.1 14.20 49992.41 30547.9 Construction 89356.8 6.9 1.5 37.5 16.2 Agriculture and Forestry 473269. Monetary Policy for 2016/17 29 Table 2 Gross Domestic Product (at current prices ) Rs.7 5.19 33407.80 139861.00 8659.2 Service 619148.1 18.6 26.35 241416.05 715802.9 12.0 5.5 11.28 20430.6 12.3 7.4 Total GVA including FISIM 1290142.07 1527343.2 10.00 9328.1 Fishery 4879.31 297126.9 5.4 0. in million Percentage Change Sectors 2010/11 2011/12 2012/13 2013/14 2014/15 R 2015/16 P 2011/12 2012/13 2013/14 2014/15 R 2015/16 P Agriculture 478148.1 14.17 5.7 6.54 139289.77 2007274.9 9.5 Financial Intermediation Indirectly Measured ( FISIM) 41660.58 931189.6 15.5 GDP at producers price 1366954.7 11.40 198164.93 12255.09 25306.8 11.1 9.43 20553.42 1758738.46 18.34 20.56 126363.66 91406.55 20.4 Transport.81 594610.32 1046694.3 Wholesale and Retail Trade 179306.11 175915.82 14.00 51420.29 58026.75 72616.3 4.03 1889409.09 36994.23 11.9 9.67 500464.48 19.20 32236.18 239922.69 5.2 18.92 527868.9 15.1 Health and Social Work 17087.3 17.2 30.0 6.6 Industry 192845.21 10.5 17.4 Non-Agriculture 811993.71 22326.2 3.51 271573.9 14.2 -1.12 103562.5 12.5 16.2 Taxes less subsidies on products 118471.4 9.4 Mining and Quarrying 6956.92 164976.6 11.86 191325.3 3.7 Other Community.42 40479.59 15.90 1580426.3 7. Social and Personal Service 46946.3 -2.3 24.89 506283.99 11.66 100312.77 1962026.46 21362.6 15.00 16.6 7.13 2248691.55 1133917.30 21619.4 6.21 5819.7 12.0 18.5 8. Renting and Business 106235.11 11.1 6.6 Financial Intermediation 50111.9 Electricity.6 5.98 1045911.53 129363.30 35309.4 17.3 Real Estate.1 21.4 14.3 11.9 6.42 139157.55 29886.40 81407.3 14.54 215387.19 16.11 614238.53 1227562.0 R .67 1525221.26 80018.5 10.

27 10.85 209704.6 102.24 526889.8 1.72 35022.75 1.8 5.9 8.90 118171.2 130.22 133.2 5.70 239664.2 94.42 11.5 11.10 763556.34 346744.47 4.50 512947.5 35.9 Total Domestic Demand 1695298. in million Perecnt of GDP Sectors R P 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2013/14 2014/15 R 2015/16 P Consumption 1176030.0 Gross National Income (GNI) 1374503.57 382971.Preliminary Estimate Source: Central Bureau of Statistics .7 39.74 32.Revised Estimate P .08 2756349.18 246146.34 40.07 2205790.0 78.00 -574530.0 10.11 132774.54 2628791.60 631500.0 100.9 R .07 1527343.0 100.48 249629.16 234227.1 137.5 19.92 232532.85 822303.2 -30.30 709956.35 186423.14 478090.69 88.8 34.87 2148730.50 43962.95 129.14 27307.16 808757.7 Import of goods and services 450058.7 Export of goods and services 121714.94 1997291.11 1167861.23 367034.52 17.7 Government consumption 130917.23 110254.75 23.11 100.80 247564.2 38.33 2894075.7 10.36 168406.28 18.22 1934046.10 1964539.24 75385.10 2539070.50 -359084.48 233958.22 2130519.70 34242.4 Net Exports of Goods and Services -328344.58 2120470.9 Private 228924.57 1886427.0 Net Factor Income 7549.13 3096225.94 1730312.48 101.30 -453719.13 2248691.33 307586.50 -635879.59 94979.1 Change in Stock 226537.84 32751.8 Gross Capital Formation 519268.58 2864669.5 27.3 Gross National Saving 506331.53 45.05 632601.8 135.25 689661.30 Nepal Rastra Bank Table 3 Gross Gross National National Income Disposable and and Income Saving Saving (at current prices) Rs.25 40658.92 562457.84 -29.74 167804.7 22.1 33.90 885049.11 29160.28 1493375.30 800552.35 1318561.60 634899.00 71555.63 2292653.81 429683.28 1662961.82 1516128.9 Private consumption 1022126.26 41.94 201914.50 11.50 803571.0 Net Transfer 307858.0 128.70 422772.35 930622.8 1.8 41.7 11.00 153863.40 12291.7 101.75 178882.17 1962407.4 82.30 226021.7 Gross Domestic Product 1366954.7 1.36 1.37 588344.9 42.7 Gross National Disposable Income (GNDI) 1682362.28 2154712.57 1695011.32 1359538.40 13078.03 38552.39 245629.18 201098.0 Government 63806.0 Gross Fixed Capital Formation 292730.67 76.1 91.6 2.60 898479.0 -28.7 Gross Domestic Saving 190923.08 164370.0 8.39 317184.8 5.82 462013.47 1539634.30 181180.3 11.20 -645384.97 1708089.90 965705.84 602868.30 883443.80 1843714.10 497700.7 25.0 Nonprofit institutions serving households 22987.7 43.

1 9.7 94.0 99.4 7.2 9.6 8.6 January 84.8 98.6 9.1 7.7* 9.5 6.7 6.8 95.2 7.6 107.0 10.9* * Average of eleven Months ** Geometrical Average .5 101.2 8.9 10.3 March 85.9 93.2 109.1 111.5 12.3 9.2 7.9 99.1 February 84.8 110.2 92.8 8.0 110.8 10.2 9.4 92.5 93.2 92.2 94.0 June 86.4 9.5 93.9 11.7 98.0 109.5 93.5 108.5 10.3 9.1 92.9 99.0 100.1 100** 7.0 109.4 112.6 Average 85.9 92.8 92.2 October 85.9 10.5 106.4 December 84.5 9.0 11.2 8.1 July 87.6 6.8 11.6 7.Months Index % Change Index % Change Index % Change Index % Change August 85.4 99.7 May 86.9 11.3 7.7 101. Monetary Policy for 2016/17 31 Table 4 National Consumer Price Index (2014/15 = 100) 2012/13 2013/14 2014/15 2015/16 Mid.2 April 85.9 September 86.2 7.9 10.1 8.6 10.4 100.7 7.2 8.9 109.2 9.4 11.9 7.2 10.9 7.3 99.2 10.2 10.2 110.1 102.4 8.7 7.4 7.0 8.2 November 85.0 7.

21301.85 80884.60 543.0 a. Foreign Assets.63 16088.84 14.88 -1141. Other 7486.43 -18617.6 d.8 192368.3 50408.23 156675.98 -11.52 211433.27 -76001.04 15.6 1/ 2/ 2. in million) 2014 2015 2015 2016 Changes during eleven months Monetary Aggregates Jul Jun Jul Jun (P) 2014/15 2015/16 Amount Percent Amount Percent 1/ 2/ 1.50 14.03 1376048.21 250637.05 270080.1 1. Deposits 80052.77 -15.41 136560. Claims on Non-Financial Government Enterprises 10417.93 244.02 -620.5 266668.3 -933.77 9290.26 847679.72 15.71 1309073.44 127203.32 Nepal Rastra Bank Table 5 Monetary Survey (Rs.07 178899.7 4.37 8.87 1640613.62 2668.24 21.46 9031.91 11683. Broad Money Liquidity (M3) 1646019.48 1130514.22 13.03 10.69 -104.7 11522.33 9796.2 b.03 100391.1 Money Supply (M1+) 1130173.2 Demand Deposits 127292.62 1662751.65 136324.72 8.78 -6.1 Foreign Assets 686759.1 million 2/ Adjusting the exchange valuation gain of Rs.6 2792.1 Domestic Credit 1314304.71 731506.2 171153.18 33306.96 1453375.16 2250531.23 1.14 2097.48 15. Money Supply (M1) 354830.88 235772. Broad Money (M2) 1565967.22 13722.67 501752.96 575262.65 11.69 94917.16 1801739.17 212414.33 15.62 22.3 3.10 217465.55 15.51 17.91 -53.7 Claims on Government 165490.97 5062.49 65987.52 383141.49 18.1 1/ Adjusting the exchange valuation gain of Rs.68 424744.2 183652.06 14.02 832768.81 56873.59 154664.2 Foreign Liabilities 87539.45 492666.57 1568417.30 19.0 -810.41 21.1 2011.08 1527345.09 -15.36 951303.02 11.99 139070.2 Net Non-Monetary Liabilities 347557.90 31.36 316515.6 12455.8 40681.76 79.5 -133243.95 7.23 747287.63 473190.66 14.68 3413.4 million P= Provisional .89 1972197.10 29.6 135406.65 24. Claims on Private Sector 1150824.2 3.00 1051656.55 10100. Claims on Financial Institutions 11073.34 14.1 b. Saving and Call Deposits 775343. Net 599219.50 458814.87 15467.60 396831.34 14864.9 48446.63 11.4 Currency 227537.53 2143679.38 3260.1 3.65 146009.06 3278.27 20.1 73509.36 161024.68 911904.4 1/ 2/ 2.41 939742.62 106851.18 94395.6 46434.2 278334.0 c.39 260844.44 103486.98 8.45 1070233.03 397168.92 1180.62 6344.12 1203937.23 4.4 Government 1487.55 30500.78 33813.61 1363239.59 127211.4 2.34 146872.53 14351.6 143922.4 153.55 18881.70 18.7 Non-government 9585.3 Government Deposits 23500.9 a.43 -6032.71 13.68 17.5 a.9 2639.65 10.9 1.7 94724.70 1877801.1 265878.74 -8.3 b.59 111914.25 12827. Net Claims on Government 141989.3 203977.82 17. Net Domestic Assets 966747.12 10.85 5995. 5083.85 1896656.31 1373944.93 1095226.31 101262.69 57383.2 Time Deposits 435793.66 42338.34 21.

06 20.23 939742.2 Time Deposits 425951.4 10652.92 1101.92 168.20 146872.53 -5.7 136580.7 183322.44 152160.84 -12.53 27.09 15.3 208236.69 1361.03 111914.14 2220.48 1203937.5 a.3 745.8 218888.22 24.33 11683.88 308247. Foreign Assets.06 3322.41 30.72 15.19 10.1 Currency 223417.18 37426.14 911904.2 -1281.55 51580.70 2143679.27 1070233. Claims on Non-Financial Government Enterprises 11986.08 1662751.47 397168.1 4529.54 136324.85 5062.36 211433.05 316515.7 82596.06 20.88 -3597. in million) 2014 2015 2016 Changes Monetary Aggregates Jun Jun Jun (P) 2014/15 2015/16 Amount Percent Amount Percent 1.0 11934.81 66715.8 55671.17 229679.9 b.3 277373.03 1568417.06 44.5 3783.3 1. Broad Money Liquidity (M3) 1571318.14 21.2 c.43 31.38 3413.55 9290.8 a.71 94917.21 28.43 -21784.99 207666.97 -20.60 6344.46 23202.02 -2189.75 -36.68 473190.4 a.44 156086.65 80884.31 1640613. Saving and Call Deposits 731001.47 22.6 341940.3 -506.06 16.91 14.63 15.22 13493.53 20.66 60628. Broad Money (M2) 1493492.18 106851.2 Foreign Liabilities 87768.84 26.51 383141. Deposits 77825.25 15467.87 14.95 19.1 Foreign Assets 667113.63 18881.40 26.5 2.34 17091.1 3.65 165654. Net 579345.07 241531.7 353874.94 -18.86 20.31 101262.41 180903. Other 9942.92 23.0 76021.36 1095226.96 12. Net Claims on Government 89133.52 1363239.20 18.04 492666.60 458814.7 209376.06 20.0 Government Deposits 79523.69 832768.1 Claims on Government 168657. Money Supply (M1) 336540.98 19.89 2668.27 -23145.7 P = Provisional .17 19.89 2250531. Net Domestic Assets 914147.6 75672.99 260844.1 Money Supply (M1+) 1067541.42 22.2 Net Non-Monetary Liabilities 331561.9 b.3 2.59 156675.13 1. Claims on Private Sector 1133559.2 2.07 133703.9 64561.21 325338.1 Domestic Credit 1245708.67 575262.26 1051656.6 259344.8 4.04 19.85 -109.30 16.55 65987.8 3.79 20.4 d.65 1801739.33 18.38 731506.6 Government 1566. Monetary Policy for 2016/17 33 Table 6 Monetary Survey (Year on Year) (Rs.36 1896656.48 9796.78 1453375.56 24.78 217465.97 -26.14 16. Claims on Financial Institutions 11029.0 -72019.6 b.9 Non-government 9462.50 70.89 32.5 1.0 3.21 17.22 14351.16 12.61 1309073.59 -6032.3 Demand Deposits 113122.5 20350.

25 LIBOR + 0.88 7.0 6.5 2.64 0.0 5.22 6.0 7.0 7.94 3.5 2.0 4.16 1.25 LIBOR + 0.0 8.02 0.06 8.68 1.10 0.0-10.65-9.83 1.0 7.5 2.0 4.65-9.57 0.0 B.09 E.0 4.0 6.25-9.44 T-bills* (364 days) 0.29 9.10 0.0-10.0 4.0 Development Banks 4.65-9.25 Standing Liquidity Facility (SLF) Rate ^ 8.59 0.46 9.0 C.42 0.0 1.10 0.65-9.0 7.0 1.0 7.5 5.76 1. . Government Securities T-bills* (28 days) 0.0 Bank Rate 8.0 6.0 Refinance Rates Against Loans to: Special Refinance 1.72 0.09 3.0 7.55 3.0 4.0 Export Credit in Foreign Currency LIBOR + 0.0 Finance Companies 4.01 0.12 T-bills* (182 days) 0.36 7.17 1.0 1.62 9.34 Nepal Rastra Bank Table 7 Structure of Interest Rates (percent per annum) Year 2014 2015 2015 2016 2016 2016 Mid-month Jul Jul Oct Jan Apr Jun A.0 4.65-9.0 8.0 2.32 6.98 $ F.0 National/Citizen SCs 6.55 9.97 0.0 6.01 .0 5.25 LIBOR + 0.27 ^ The The SLF SLFisisprovided provided at at bank bank rate rate effective effective from fromAugust 16 2012 16 August 2012 * Weighted average interest rate.0 4.0 4.0-10.0 6.82 6.94 3.0 4.0 General Refinance 5.0-10. Interbank Rate of Commercial Banks 0.0 1.36 D. Policy Rates CRR Commercial Banks 5. .0 6.25 LIBOR + 0. .67 Development Bonds 3.0 4.0 6.32 2.0 1.94 1. Weighted Average Deposit Rate (Commercial Banks) 4.0-10. Weighted Average Lending Rate (Commercial Banks) 10.0 6. Base Rate (Commercial Banks) 8.0 7.0 5.0 2.0 6.0 5.26 1.25 LIBOR + 0.0-10.29 0. .0 7. - T-bills* (91 days) 0.56 1.0 6.

8 9. - November . . . . . .9 . . . . In million) Sale Auction Purchase Auction 2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 Mid-month Amount Discount Amount Discount Amount Discount Amount Discount Amount Discount Amount Discount Rate* Rate* Rate* Rate* Rate* Rate* (percent) (percent) (percent) (percent) (percent) (percent) August . . .8 . . . . .0 0. . . . . . . . . . .0 0. . . . . . . . . .0 2. . .100. .500. . . . - September . . . . . . . .1 6. . . - December . . . .0 0. - February . . . . .0 0. . . . . . . . 5. . . - October 8. Monetary Policy for 2016/17 35 Table 8 Outright Sale and Purchase Auction (Rs. . . .900. .200. . . . . . - April . .0 .0 1. - June . . . - July . - * Weighted Average . . . . . - May . . . . . .500. . . . . . . . . - Total 8. . . .1 . . . . - January . 6. 3. . . . .1 . . . . . . . - March . . . . .000.000. .

0 0.07 July .700. 29.0 0. . . In million) Repo Auction Reverse Repo Auction 2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 Mid-month Amount Discount Interest Amount Discount Interest Amount Discount Interest Amount Discount Interest Amount Discount Interest Amount Discount Interest Rate* Rate* Rate* Rate* Rate* Rate* Rate* Rate* Rate* (Percent) (percent) (Percent) (percent) (Percent) (percent) (Percent) (percent) (Percent) (percent) (Percent) (percent) August .0 0.0 0.0 0. . .17 40.800. .0 0. . . . .03 20. 79.910. . .0 0. . .04 February . 20.000.000.02 25. .0 0. 78. .0 0.07 68.050. .72 September . . .13 January .0 0. .420. . .000.06 22.08 2. . . . . 602. . .000.0 0. . . .0 0. .0 1.39 9. 99.00 13. .500.04 2.26 40.0 0. . 15. . 78.36 Nepal Rastra Bank Table 9 RepoRepo and Reverse RepoRepo and Reverse Auction Auction Auction (Rs.30 October .11 35. .0 0.41 June .0 0.0 0.000.000.300. . .05 6.000. . .000.0 0.18 850. .500. .000.05 19.21 December . .0 * Weighted Average . 97.0 1. .0 0.000.000. .270.0 0.40 25.0 0. .000.000. .04 11.0 0.000. .000. . 54.01 12.750. .0 0. .500.000. . .0 0. . 58.500. . . .000.0 0.0 0.0 0. . .02 - Total . 11.05 210.500. .17 April .000.05 9. . .0 0.500. .05 8.0 0.0 0.11 March .32 5.16 315. .500.68 40. .000.0 0.22 November . .0 0.0 0.0 0.08 May .950. . 93. .

- June .000.000.69 60. - May 10.100.0 0.000.0 0.500.0 0. - October 20. In million) 2014/15 2015/16 Mid-month Interest Rate* Interest Rate* Amount (percent) Amount (percent) August .0 0.0 0.0 0.000.000. 57.150.08 January 20.250.000.000. . .79 .0 0.000.72 .0 1.87 December 15.24 - Total 155.69 .0 1.000. - November .86 39.21 26. Monetary Policy for 2016/17 37 Table 10 Deposit Collection Auction (Rs. . .000.000.20 15.0 0.67 .0 0.39 April 10.0 *Weighted average .0 0.000. 100.48 March 5.81 February 5.0 0. - July 50.0 0.0 0.39 September 20.000.45 297.0 0.

8 4.8 14.4 0.4 83.0 1644.3 Total Resources 393680.1 Foreign Grants 37264.8 42423. - Freeze-3 Financial 0.6 35.4 279092.5 93.7 Revenue and Grants 374779. 9 branches of Everest Bank Limit ed.4 50.1 3.6 -578. Fund Account 2359. - Freeze-1 Recurrent 9.Foreign Loans 0.0 b.2 -28.0 a.4 236.0 12.3 23. 22 branches of Agricult ure Development Bank.6 33596.3 3.Foreign Loans 4593.6 440997.38 Nepal Rastra Bank Table 11 Government Budgetary Operation+ (On Cash Basis) Based on the data of the forth week of Asar (Rs. 69 branches of Rast riya Banijya Bank Limit ed. - Total Expenditure 370786.6 -6175.0 .5 300428.0 315211.8 Customs Fund Account 913.4 -130.0 5.9 69350.0 149.6 -63.1 12342. net 7468.2 56629.0 .9 79406.0 Domestic Borrowings 9982. NMB Bank Limit ed and Bank of Kat hmandu Limit ed conduct ing government t ransact ions and release report from 79 DT COs and payment cent res.8 -197.5 Others@ 1431.6 (i) Treasury Bills 0.8 Sources of Financing -22893.Domestic Resources 253407.2 5385.4 3309.2 15231.Domestic Resources 36286.4 Foreign Loans 15009.4 83.6 V.7 b.4 Deficits(-) Surplus(+) 22893.0 326.4 71.5 434270.1 15.5 a.1 18.0 10000.0 -48535.6 1397.0 9.0 (ii) Development Bonds 9000.5 83939.0 .6 -578.6 c. - Freeze-2 Capital 129.6 3173.5 29180.6 -19.7 Capital 46366.5 10.0 -5. @ Int erest from Government T reasury t ransact ions and ot hers.0 -2.1 87662.1 325.2 0.9 a.Foreign Grants 5729.6 289495.3 3969.4 212.7 -163300.0 20500.3 0.8 -16.4 79734.0 -5.4 Principal Refund and Share Divestment 425.7 162.4 29.7 497893.4 15.6 7.4 c.1 19.8 10.0 62000.0 b.0 0.0 .6 -75834.8 Internal Loans -38328.9 5.8 -44.1 1733. in million) Amount Percent Change Heads 2013/14 2014/15 2015/16 P 2014/15 2015/16 July-11 July-10 July-08 Expenditure of Budget 370648.1 75439.0 105.0 106. - Local Authorities' Accounts (LAA)# 8213.0 9725.7 7806.1 18156.0 30000.0 0.8 63.7 409824.5 -108.Foreign Grants 22330.3 464297.1 22.3 7559.4 + Based on dat a report ed by 8 offices of NRB.7 (v) Foreign Employment Bond 76.4 51.0 0.2 4.4 0.4 1563.2 -112.0 -21. P : P rovisional.1 Financial 43950. - (iv) Citizen Saving Certificates 0.6 29480. A.8 -104. ++ Minus (-) indicat es surplus.5 26.0 .6 5536.7 39.1 27.3 433980.4 5000.3 464297.2 6601.6 12758. 49 branches of Nepal Bank Limit ed.4 46854.0 3136.3 422.2 -33. .0 0.6 Overdrafts ++ -49743.7 Expenditure from Freeze Accounts 138.0 0.6 -76.9 Revenue 337515.0 0.4 59526.Foreign Grants 559.9 Others -53.6 -33596.6 22.0 128. 113.Domestic Resources 43390.9 8601.3 Recurrent 280331.4 -130. T.9 1706. 4 branches of Global IME Bank Limit ed and 1 branch each from.1 447.1 9.0 .2 380643.3 5684.0 233.2 -64.0 -196.0 0.3 106.0 .7 (iii) National Savings Certificates 906.7 -83.7 Non-Budgetary Receipts.2 440997.7 7016.2 475046.7 40776.9 91.2 0.0 0. # Change in out st anding amount disbursed t o VDC/DDC remaining unspent .9 -30.6 Reconstruction Fund Account 0.2 14.9 4287.7 18026.Foreign Loans 4350.1 c.0 2339.9 1128.7 -7016.

9 57070. Commercial Banks 0.8 16565.5 -5031.0 e. 2016.7 79.2 45574.6 d.7 -28.3 215.7 b.4 31.5 2525.8 258145.0 136363.0 18526.0 0.9 16099. .7 -5510.8 5613.7 21.5 2793.0 a.5 196785. Monetary Policy for 2016/17 39 Table 12 Outstanding Domestic Debt of the GoN (Rs. Others 19378.8 -200.1 -10312.1 e.0 c.0 2957.5 8366.7 158.4 4750.9 2180.3 44127. Nepal Rastra Bank 23333.7 0.3 0. Commercial Banks 136367.2 1539.0 5201. Others 16567.0 a.4 907.1 7263.0 373.1 6140. Others 36326.4 982.7 158.7 a. Commercial Banks 23006.0 4 Citizen Saving Bond 1516.7 16432.0 0.1 56750.0 0.7 3 National Saving Bond 16586.5 253.010 -0. Finance Companies 2702.3 100729.0 b.7 3056. Development Banks 721.9 5138.2 106869.3 -2946.0 0.8 0.0 0.3 3047.0 113820.9 81208.0 1503.03 -0. 29 Jun 2016- Mid-Jul Mid-Jul 29-Jun Mid Jul 2014 Mid Jul 2015 1 Treasury Bills 136468.0 c.01 b.0 0.5 4950.0 0.9 -4080. Nepal Rastra Bank (Secondary Market) 1265. Nepal Rastra Bank 18.1 11055.0 0.0 0. Finance Companies 3046.5 12627.1 -197113.0 a.6 841.6 2303. Development Banks 0.6 c.5 16586. Finance Companies 0.8 61359. Others 0.0 0.8 d.1 343.1 5 Foreign Employment Bond 135.5 -84. Commercial Banks 0.5 -12631.5 0.6 16438.1 111.0 Note: The amount of Government overdraft/savings is based on June 29.7 b.1 125059.1 188078.0 0.6 -757.3 -163300.4 2. Development Banks 2022.3 215.0 0.8 35633.5 91.0 0.4 3087.7 23696.0 373.8 -33813.0 d. Commercial Banks 113360.0 0.7 6 Total Domestic Debt 201817.7 158.0 0.0 0.720 79.0 e.6 7498. Nepal Rastra Bank 0.0 a.0 0.0 9959.0 1503.3 0.2 7 Nepal Government's Balance at NRB (Overdraft (+)/Surplus(-) -23500.0 0. Nepal Rastra Bank 22048.1 -16610.4 507.0 b.0 51715.0 d.0 0. Nepal Rastra Bank 0.0 b.9 17968.4 -141.5 11086.0 28.2 d.0 -1869.0 0.9 -4806.0 -4.8 2 Development Bond 47110.0 3888.2 7806.5 -565. Finance Companies 337.4 c. Development Banks 0.4 185.0 -5500.9 3776.0 28. Name of Bonds/Ownership Mid-Jul 2015.0 2548.6 e.0 0.7 10.4 -2087. Finance Companies 6.6 307.0 474.1 119858.0 -6.02 0.5 -432.0 c.0 0.0 0. Others 135. Development Banks 2744. in million) 2014 2015 2016 Amount Change No.7 e.1 -2. Others 245.8 35761.0 0.7 a.

5 26610.5 0.5 National Saving Bond 0.0 -16615.0 0.0 79.2 Treasury Bills 14156.0 2248691.1 3.0 906.0 2339.4 0.0 0.0 0.0 76.5 9994.4 0.0 158.4 0.6 100.0 C Net Domestic Borrowing (A-B) -1960.2 -0.1 100.9 Treasury Bills 19000.0 4.0 9000.0 0.0 1.3 15299.7 Treasury Bills 4844.0 0.1 100.0 0.8 National Saving Bond 0.1 10000.1 0.5 30000.0 5500.7 1.2 25167.0 -5500.0 1964539.0 0.0 -0.2 50402.2 National Saving Bond 0.0 2120470.0 1.7 20040.0 0.0 0.7 0.0 0.0 0.4 0.0 0.2 Citizen Saving Bond 939.1 19982.1 -0.9 1.0 906.9 5250.4 2.0 0.0 250.0 1.3 0.0 -0.0 0.1 100.2 Foreign Employment Bond 42.0 B Loan Payment 21003.0 76.8 5201.5 0.5 56750.1 3.1 5000.5 0.3 -4500.0 D Gross Domestic Product 1695011.0 0.1 -5184.0 0.0 Foreign Employment Bond 0.2 Citizen Saving Bond -939.0 0.8 -0.1 0.9 0.1 100.7 2.7 0.4 0. in million) Mid-July 2013 Mid-July 2014 Mid-July 2015 June -29 2016 Mid-July 2016 p No.0 87662.0 2248691.2 26302.7 0.2 Development Bond -5908.0 0.0 Citizen Saving Bond 0.9 87662.9 0.0 0.9 1.9 2.2 Foreign Employment Bond 42.1 0.8 1.2 61359.0 0.40 Nepal Rastra Bank Table 13 Net Domestic Borrowing of the GoN (Rs.1 1667.4 62000.0 83.3 47454.0 0.5 20500.0 0.9 0.3 -0.0 162.0 0.0 0.1 4750.0 0.0 0.0 0.0 3.0 0.0 42418.1 1.1 1539.9 Development Bond 0.0 0.9 -0.1 -0. Name of Bonds/Ownership Percent of Percent of Percent of Percent of Percent of Amount Amount Amount Amount Amount GDP GDP GDP GDP GDP A Gross Domestic Borrowing 19042.1 2.8 10000.7 Development Bond 5908.5 -0.0 0.1 800.0 2.1 -1667.3 13500.0 0.0 0.0 0.2 9959.9 0.4 1.0 2.7 37259.0 P =Projected .0 0.0 0.0 0.3 -5036.0 0.3 0.

6 With India -418333.7 16.6 -6.4 Other Countries 18.1 24.02 746907.5 3.4 23.26 2157.5 66.7 66.1 14.2 3.8 With India 537560. S hare in Trade Balance India 67.48 77831.9 30.50 -63021.3 1.96 2.19 860003.2 63.9 24.59 455853.35 160796.4 61.90 148885.5 With Other Countries -133563.29 185907.60 25014.9 91.31 -1.02 488836.4 9.7 65.3 14.09 -612865.8 2.95 -97936.8 89. Export / Import Ratio 12.90 684752.7 63.6 -2.8 63.0 -1.09 -6.9 11.4 To Other Countries 29536.8 -20.1 To India 59613.15 210086.90 2175.3 China 3.7 8.9 63.87 10.98 -4.5 With Other Countries 192637.3 9.3 -31.4 12.1 2.44 103645.96 7.2 14.6 23.0 11.4 -3.50 486162.6 5.18 8.1 88.30 40.9 10.6 90.7 1.6 61.01 -136231.1 Other Countries 22.3 15.30 -435791.15 42.1 62.8 23.7 With China 76159.7 + On customs data basis .30 -123871.8 To China 2840.7 11.9 11. S hare of Export and Import in Total Trade Export 11. S hare in Total Trade India 66.30 67372.30 -377080.3 1.9 2.1 2.14 105147.1 8.4 12.61 690696.15 437728.90 431621. S hare in Total Export India 64.9 Total Imports 714365.60 54540.49 6.3 Import 88.70 547520.81 -90013.4 From Other Countries 163100.58 -0.9 6.59 -689365.01 34872.8 65. Monetary Policy for 2016/17 41 Table 14 Direction of Foreign Trade + (Rs.74 1501.4 Total Foreign Trade 806357.0 China 9.6 2.5 11.10 -563973.4 4.35 -155637.99 8.58 420981.9 From India 477947.27 -386620.8 From China 73318.3 16.4 Total Trade Balance -622374.1 23.50 173899.18 0.6 11.1 With China -70477.9 16.0 China 11.72 41.3 23.2 10.8 4.0 -0.69 185362.05 1.8 13.6 41.9 24.30 85319.10 81730.30 727434.8 15.6 0.20 645703.12 92171.3 14.1 13.5 66.65 100166.6 31.37 25781.70 -102144.40 65197.1 India 12.4 11. S hare in Total Import India 66.8 -30.34 24565.2 66.88 160126.5 -0.3 12.0 12. in million) Annual Eleven months Percent change during eleven months 2013/14 2014/15 2013/14 2014/15 2015/16 2014/15 2015/16 Total Exports 91991.5 China 10.89 774684.38 94329.2 11.87 51108.4 Other Countries 32.7 2.09 768528.12 62154.51 -134344.5 22.1 China 3.70 2229.8 63.6 22.7 56.9 63.1 31.1 Other Countries 23.57 -386108.35 102396.0 22.3 2.00 491655.0 -0.78 -622597.3 12.70 55864.25 182861.98 5.4 Other Countries 21.9 9.2 21.90 27224.

80 403.00 -2565.20 24317.60 38926.1 D.01 30.0 -17. Group A through C 104595.00 0.00 149288.80 7810.70 -18965.8 30.90 -577688.2 Other liabalities -1174.90 -12544.70 -1625.4 36.50 37305.00 11919.50 95285.70 3194.10 39678.4 10.40 -1324.20 -159354.30 2770.8 Other 49542.40 14338.60 4192.20 -601636.20 -4.75 7.00 0.40 11614.55 183603.43 47922.10 42388.8 Balance on Goods -543210. Groups A plus B 93575. -634701.00 46374.00 -3354.20 -50661.20 142333.40 -112044.30 15.30 66600.2 -5.80 89721.80 11857.70 52580.3 29.75 11927.40 -611445.3 -61.40 27617.b.50 -53190.83 17720.40 24180.00 41928.00 -17.8 -2.80 27947.1 -16.60 12450.30 -595412.50 56465.90 123131.97 123370.40 10.97 -128536.95 -183603.8 48.50 695299.5 32.1 Services: credit 114408.i.0 Trade credits 22445.80 1667.97 43491.00 0.60 -29064.9 Trade credits -2370.60 -48465.10 34310. Net 7888.50 634854.08 -1326.90 41373.25 43.4 Transfers: Net 571975.50 -635879.00 -100.2 -110.80 -536046.7 4.00 0.80 14318.5 -41.53 -142119.79 109.30 29.00 63378.20 -594377.1 Nepal Rastra Bank -98838.20 617278.90 2733.0 - Current transfers: debit -2934.10 66.50 -2254.1 0.30 12994.30 -35.40 108319.3 29.4 3.1 Others -19159.53 142119.62 117932.75 -2.20 -132976.90 -116361.80 598950.80 -17065.increase ) -109560.Povisional * Change in reserve net is derived by netting out reserves and related items (Group E) and currency and deposits (under Group C) with adjustment of valuation gain/loss.20 -62.1 Other investment: liabilities 27718.1 29.60 -34584.47 -127127. 91491.20 698689.5 5.30 -39962.0 26.32 11147.5 Nepal Rastra Bank -27.1 Balance on Goods. Group A through D 112484.5 Use of IMF's Credit and Loans -1171.00 17.60 4798.7 Portfolio Investment 0.40 -42175.70 -541778.70 17.80 130081.89 -1.60 89536.80 -130352.3 Grants 44074.4 8. Reserves and Related Items -112484.40 -563396. 21659.20 -16724.60 -16370.00 3.97 -1165.2 10.00 107175.0 24.4 67.1 Other -17487.2 Government n.7 Other -512003.65 13297.40 14915.40 12.2 -2.15 16.10 551742.00 -14.70 -32350.70 27972.0 * Changes in reserve.93 -1006.10 1379.2 Reserve assets -111312.50 -1974.6 Transportation -36461.3 37.07 -115992.80 37075.o.75 109.75 -2.50 17.0 -6.00 0.30 52855.30 100960.30 14180.90 23.7 12.30 37.97 16194.20 -20555.60 -649728.40 7.95 -152331.30 -23.60 3701.30 -678921.10 23686.6 Pensions 38214.80 12455.70 -603832.0 Total.80 42165.70 39539.00 -40762.4 -98. Current Account 77839.10 21815.8 -22.9 Services: debit -94682.4 B Capital Account (Capital Transfer) 15735.7 Other (Indian Excise Refund) 1667.60 -302.5 Deposit money banks -12474.94 26.80 54333.20 -1004.60 24352. Services and Income -494135.50 11890.8 Balance on Goods and Services -523484.90 -22509.40 -145035.30 34242.20 159354.5 Goods: Exports f. - Other investment: assets -19857. net ( .9 Other sectors -199.05 120.1 -25.94 26.90 4.90 -663496.0 -1. - Other 91491.40 125816.00 48519.7 49.1 Deposit money banks 2951.1 34.00 0.30 -78.60 -121670.1 -25.50 -565067.2 249.40 -27839.60 0.50 14811.40 -17642.79 47.10 -104179.70 32481.38 -14.00 -761773.23 -114934.1 Workers' remittances 490952.00 4382.3 32.80 -39822.55 36110.30 66600.70 -19711.4 0.37 129860.60 -30997.7 Drawings 16803.00 -8146.20 -5.40 -6788.70 -3390.65 8.80 4407.30 631331.70 -589384.85 155631.20 11.50 25.70 -43996.60 -23668.20 -158191.2 E.00 -31272.5 -16.13 -127203.9 13.22 56.2 Total.30 32751.5 O/W Education -13328.80 0.6 Goods: Imports f.2 50.80 543294.5 Income: credit 35510.00 -110143.20 -215.60 709956.35 -2.8 5.6 P .5 -6.8 Repayments -13080.00 -1932.5 2.70 55.4 Travel 43206.3 Oil -122698.7 1.1 -10.30 53428.2 Income: Net 29348.50 17063. in million) Percent change Particulars P 2013/14 2014/15 2015/16 during eleven months 11 months Annual 11 months Annual 11 months 2014/15 2015/16 A.20 -27575.70 -1949.00 .40 57811.50 -27610.80 633585.10 98276.9 19.10 -26180.47 18502.b.90 -2234.0 Total.80 22912.00 0.40 125061.93 56.86 8.50 631500.00 .00 0.40 7766.30 -24.40 -20.70 29021.5 Services: Net 19726.5 Government services:debit -1417.5 6.60 -58988.00 28961.80 -2069.1 Current transfers: credit 574909.10 14860.e.20 134461.80 -15900.50 29159.55 -183603. Miscellaneous Items.9 Direct investment in Nepal 3159.9 -17.50 9454.95 -171153.3 5.42 Nepal Rastra Bank Table 15 Balance of Payments Situation (Rs.3 - Currency and deposits 2923.00 -574530.20 410.30 20882.10 14.50 28.8 -35.10 -8054.90 -21331.9 5.61 137.33 -141115.20 -8589.40 -15121.40 -101232.30 -15681.60 712522.20 12.00 21132.3 General Government 3722.8 C Financial Account (Excluding Group E) 11020.30 100960.00 0.40 -36.10 98276.0 Loans 3523.73 140851.60 89536.40 12252.80 16.80 -1.90 50048.33 18.6 Income: debit -6162.74 16.37 -129860. .60 -696373.8 5.o.52 29284.20 27515.00 0.20 -1620.3 -100.40 -43.50 42831.30 106785.00 -1162.56 18748.00 -670433.24 22.6 Oil 0.0 22.70 -565217.54 14.00 -17041.0 Travel -37643.65 -3514.10 10.94 26.83 -18.

8 186714.8 B. S DR.0 16.9 713499.0 -171153.1 28.0 100391.7 22.1 824056.4 939742.2 Inconvertible 5633.0 27.0 H.0 11.1 107.0 224185.7 78.5 21.8 13.3 847679. val.6 111914.3 11. .4 22.9 16.2 23623.9 899232.5 -148067.7 22.7 1.1 Share in total (in percent) 77.3 26.0 Convertible 513505.8 20. Change in NFA (6+7)*** -127127.2 747287.3 Merchandise and Services 10.1 Inconvertible 146268. Change in NFA (before adj.1 23. Gold.9 D. Net Foreign Assets(D-E) 599219.0 Convertible 87372.5 14.7 731506.8 9.0 C.4 17.7 7444.8 26.8 -132286. in million) Percent Change Mid-Jul Mid-Jun Mid-Jul Mid-Jun 'Mid-Jul to Mid-June 2014 2015 2015 2016 2014/15 2015/16 A.7 J.1 797554.4 -145036.3 26. Bank and Financial Institutions * 93006. Foreign Liabilities 87539.8 7181.3 24.2 216741.6 2.5 13.1 26.6 5083.7 21301.9 869315.8 517456.0 832768.1 Inconvertible 151901.2 26. IMF Reserve Position 21352.8 G.9 102. *** After adjusting exchange valuation gain/loss Note: IC reserve of BFIs is taken from previous month.2 191756. Gross Foreign Exchange Reserve 665407.3 11.1 25.1 152424.2 21.9 690211.2 14.7 652574.2 114843. Monetary Policy for 2016/17 43 Table 16 Gross Foreign Assets of the Banking Sector (Rs.5 703060.1 3031.1 Sources : Nepal Rastra Bank and Commercial Banks.0 1051656.4 144980.3 21.1 28.3 Gross Foreign Assets Merchandise 11.6 23.)* -130981.1 Import Capacity in Months Gross Foreign Exchange Reserve Merchandise 11.1 -127203."B" & " C" class financial institutions licensed by NRB.3 101262.9 21.0 1021739.7 21. Gross Foreign Assets (A+B) 686759.9 Share in total (in percent) 22.8 Merchandise and Services 10.5 F.2 15. Exchange Valuation 3854.7 726683.7 11.3 112087.7 16.9 510678.6 Convertible 426132.7 24. **Change in NFA is derived by taking mid-July as base and minus (-) sign indicates increase. Estimated.6 11.5 13.4 I.0 179532.0 29916.1 13.2 101.2 23. ex.6 120995.1 119268.1 23288.4 6151.2 76.9 632300.9 76.5 20.0 809480. Foreign Exchange Reserve 572400.8 23.1 19. * indicates the "A".2 622765.7 185604.7 -192455.7 E. Nepal Rastra Bank (1+2) 593752. Period-end Buying Rate (Rs/USD) 95.

986.577.360. .642.0 18.4 .8 42.9 1.8 55.3 . 294.9 .9 376.538.0 29. 406.4 340.5 43.0 January 253.9 16.9 . 332.236.0 * Based on July 8.923.964.574.3 4.9 350.5 43.3 31.502.1 .4 360.658.964.255. 295.0* .5 13.5 295.992.0 25. US$ Nrs.9 22.0 160.3 320.4 1. 275.236.916.816.6 .44 412.053.4 31.9 37.290.3 450.20 115.039. .0 May 546. .9 396.50 346.584.986.556.64 242.9 18.9 .3 31. . . .916.3 24.3 406.5 3.1 271.7 26. 416.00 407.1 4.9 21.9 28. 318. 4.5 34.790.013. 416. US$ Nrs.9 .711.4 55. US$ Nrs. US$ Nrs.4 11.654.4 .9 28.3 41.2 21.6 .66 269.654.55 314.0 September 195.9 .1 220.3 220.6 42.9 39.2 .5 36.0* 26639.116. 253.0 October 330.3 31.7 247.644.486. in million) Purchase/Sale of Convertible Currency IC Purchase 2014/15 2015/16 Mid-month Net Net 2014/15 2015/16 Purchase Sale Purchase Sale Injection Injection US$ Nrs. .67 543.9 .6 43.301.1 26.5 31. .9 .1 3.104.5 34.403.0 10. 349.4 19. US$ Nrs. .3 397.394.7 280.8 42.0 November 294. .4 13. .365.611.301.711.249.0 21. 330. 376.4 31.3 30.0 June 539.2 .642.6 320.495.8 24.188.380.6 55.0 24.0* 26639.916.9 318.327.3 399.139.0 14.920.6 18.9 416.500.0 April 315.327.9 217.9 39.584. 539.886.509.043.5 320.8 450.716.2 416.5 360.0* 20.0 224.5 .486.0 3.0 July 416.255.6 42.886. .2 .7 220.1 320. 350. 399.5 .816.469.4 60.5 18.9 37.6 55.6 340.031. .888.0 December 309.3 30. .7 26.538.534. 2016 .177.3 260. .1 26. .3 37. 320.0 . IC Purchase US$ Sale IC Purchase US$ Sale August 275.0 25.2 320.470.039. 247.0 21. .0 March 320.9 200.1 346. 309.104.5 36.134.6 19. .957.9 18.395.3 37.1 300.5 . .556. 195.189.659.2 332.0 18896* 280* Total 4.855.2 349.0 February 246.3 42.5 300.1 4.556.5 3.8 450.2 300.8 2.0 18.0 34.6 43.790.723.401.0 20.0 22.0 12.44 Nepal Rastra Bank Table 17 Foreign Exchange Intervention ( Rs.534. .574. . 346.0 34.4 380.