Monetary Policy 2080/81 of Nepal - Inflation, Interest Rate, Money Supply, Repo Rate, Bank Rate, Reverse Repo Rate, CLR, SLR, CD Ratio Explained| Banking Knowledge | By. CA. Suraj Dhakal

Welcome to our comprehensive analysis of Nepal's Monetary Policy for the fiscal year 2080/81. In this video, we will delve deep into the crucial aspects of monetary policy and their impact on the Nepalese economy. Join us as we explore inflation, interest rates, money supply, repo rate, bank rate, reverse repo rate, Cash Reserve Ratio (CLR), Statutory Liquidity Ratio (SLR), and the Credit-Deposit (CD) ratio. Understanding these key factors is essential for businesses, investors, and everyday citizens to make informed financial decisions.

1. Monetary Policy Overview
Nepal's Monetary Policy is formulated by the Nepal Rastra Bank, the central banking institution, to manage the money supply, interest rates, and achieve the country's economic goals. The primary objectives are maintaining price stability, fostering sustainable economic growth, and promoting financial stability.

2. Inflation and its Impact
Inflation refers to the general increase in prices of goods and services over time. The Monetary Policy aims to keep inflation at a stable and manageable level. A moderate inflation rate is essential as it encourages spending, investment, and economic growth. However, high inflation erodes purchasing power, reduces consumer confidence, and destabilizes the economy.

3. Interest Rates
Interest rates play a significant role in the economy. The central bank uses interest rates to control borrowing and lending activities, influencing consumer spending, investments, and business decisions. Lower interest rates encourage borrowing and spending, thus stimulating economic growth. On the other hand, higher interest rates dampen borrowing and help curb inflation.

5. Repo Rate
Repo rate, short for the repurchase rate, is the interest rate at which the central bank lends money to commercial banks for a short period, usually overnight. It is a crucial tool for liquidity management and influences short-term interest rates in the economy. Changes in the repo rate affect borrowing costs for banks and, in turn, influence lending rates for consumers and businesses.

6. Bank Rate
The bank rate is the rate at which the central bank lends money to commercial banks on a long-term basis. It serves as a reference rate for commercial banks while setting their lending rates. By changing the bank rate, Nepal Rastra Bank can affect the overall cost of credit and influence economic activity.

7. Reverse Repo Rate
The reverse repo rate is the interest rate at which the central bank borrows money from commercial banks. It helps control the money supply in the economy. An increase in the reverse repo rate encourages banks to lend more to the central bank, reducing the money supply. Conversely, a decrease in the reverse repo rate injects more liquidity into the system.

8. Cash Reserve Ratio (CRR)
CRR is the percentage of total deposits that banks must keep with the central bank as reserves. By adjusting the CRR, Nepal Rastra Bank can control the amount of money that banks can lend. A higher CRR reduces the money available for lending, thus restricting credit and controlling inflation.

9. Statutory Liquidity Ratio (SLR)
SLR is the percentage of specific net demand and time liabilities (NDTL) that banks must maintain in the form of liquid assets like cash, gold, or government securities. SLR helps ensure the safety and liquidity of the banking system while also influencing credit availability in the economy.

10. Credit-Deposit (CD) Ratio
A high CD ratio indicates that banks are extending more credit relative to their deposits, while a low CD ratio signals that banks are holding a significant portion of their deposits as reserves.

Suraj Dhakal is a professional CA, Business Consultant, And Business Coach. He started sharing business strategies and business content to bring revolution in the startups and businessmen with a mission to convert dream business from busyness into a real business. He begins with a simple concept of business where you will find every aspect of your business. It is applicable to every business, be it big or small.

Mobile: +977-9802342601
Email: casurajdhakal1@gmail.com
Connect us at:
► Instagram: https://www.instagram.com/dreambusinessofficials
► Facebook: https://www.facebook.com/dreambusinessofficial
► Twitter: https://twitter.com/Dreambusiness91
► Linkedin: https://www.linkedin.com/in/dreambusinessofficial
► Tiktok: https://www.tiktok.com/@dreambusinessofficial

#monetarypolicy #CLR #SLR #CDratio #baserate #reversereporate #bankrate #inflation #casurajdhakal #dreambusinessofficial #InvestmentOpportunities #economicgrowth #businessconsulting #policyrate #rastrabank #nepalbudget #maudrikniti #entrepreneurship #nrb #banking #bankingexams #bankingknowledge #bankingkhabar