NRB Preparing First-Quarter Monetary Policy Review as Liquidity Pressure and Jen-Z Movement Impact Dominate Economic Concerns

The Nepal Rastra Bank (NRB) is preparing to release the first-quarter review of the current fiscal year’s monetary policy by Mangsir 15. With investment sentiment weakening, banks struggling to mobilize growing deposits, and excess liquidity piling up in the financial system, the upcoming review is expected to carry significant policy adjustments.

Despite ample liquidity, credit demand has remained sluggish. Commercial banks are sitting on large volumes of idle funds, putting pressure on interest rate management and overall financial stability. Analysts note that the gap between rising deposits and slow loan expansion has created a structural imbalance in the banking sector.

The Jen-Z protest movement on Bhadra 23 and 24 has further strained the financial system. Many borrowers were unable to pay interest and loan installments on time, reducing banks’ income and pushing more borrowers into the “blacklist” category. The destruction of private and public property during the protests has also dampened investor confidence, affecting both the stock market and the gold market.

Amid these challenges, the central bank is assessing whether interest rates should be revised. An increase in rates could further suppress credit demand, while reducing rates might worsen liquidity pressure. The review is also expected to evaluate possible adjustments in the Cash Reserve Ratio (CRR)—the mandatory portion of deposits banks must maintain with NRB—which directly influences both interest rates and market liquidity.

NRB Governor Dr. Bishwanath Paudel has signaled that the central bank is working on new, simplified measures aimed at supporting the business community. He has hinted at partial relief for borrowers who have recently landed on the blacklist, along with policies designed to make gold and stock market investments easier and more systematic.

The governor has also emphasized the need to expand financial access for underserved communities by increasing awareness of banking schemes and encouraging responsible investment. Several of these themes are expected to be reflected in the upcoming monetary policy review, which many hope will help stabilize the market and restore investor confidence.