Nepal Rastra Bank (NRB) has instructed banks and financial institutions not to change interest rates on loans during the loan period. NRB issued a directive on Thursday.

The NRB has made an arrangement to review the interest rate for the first time in seven years and thereafter every five years in the written agreement with the borrower so that the loan will not change throughout the loan period. Apart from this, it is mentioned in the directive that the interest of such loan cannot be changed for any other reason.

The directive also stipulates that licensed banks and financial institutions should enter into an agreement clearly stating the work, duties, rights and responsibilities of the appraiser while listing the appraiser for the purpose of valuing the collateral.

The NRB directive states, “Licensed Banks and Financial Institutions shall make sure that the appraiser evaluates the collateral independently without any vested interest or without prejudice, on the basis of international norms and good practices.”

Similarly, NRB has directed the banks and financial institutions to maintain the prescribed ratio by Ashad 2079 BS if the CD ratio is higher than the specified ratio. For this, deposit mobilization and credit flow should be managed on a monthly basis for compliance with the prescribed loan-to-deposit ratio.

The directive states that the action plan required to maintain this ratio within the prescribed limit by Ashad 2079 BS should be approved by the Board of Directors and submitted to this bank and implemented.