Kathmandu, August 7: Nepal Rastra Bank (NRB) has fixed an age limit for board of directors and chief executive officers of banks and financial institutions (BFIS).
Issuing a new circular recently, it barred BFIs from appointing or reappointing CEOs who are above 65 years of age. Likewise, it also set an age bar of 70 years for the board of directors at BFIs.
Likewise, the central bank revised formula to calculate spread that a bank must maintain between their deposits and lending rates.
In line with its announcement in the Monetary Policy for Fiscal Year 2019/20, it directed the banks to lower the interest rate spread to below 4.4 percent by mid-July next year. Any of them failing to maintain the spread rate will face action, it further warns.
The revised formula will further reduce the real difference between deposit and lending rates of banks compared to the current method of calculating the spread rate. From now onward, banks must include their interest-earning from their investments in government securities while calculating spread rate. Earlier, they were allowed to include such interest earnings in spread calculation.
NRB also barred banks from charging more than two percentage points in premium on their base rate as interest rates on loans of up to Rs 1.5 million on agricultural, entrepreneurial and business promotion.
