Central bank allows banks to use local unit funds for productive sector lending

The latest move is expected to ease the liquidity crunch in the banking system.

Amid an acute shortage of loanable funds in the banking sector, the Nepal Rastra Bank on Monday opened the door for commercial banks to count upto 80 percent of the reserve funds of the local governments deposited in commercial banks as deposit. The central bank has also paved the way for the banks to use such funds for lending in the productive sector.