The Nepal Rastra Bank (NRB) plans to tighten monetary policy discouraging financial institutions to make further investment in real estate without investigating risks, The Kathmandu Post reported.

The initiatives come after the International Monetary Fund (IMF) commented that loose monetary policy of Nepal has some contribution to boost real estate prices, adding the decline in their prices would invite negative impact on the investors.

The daily quoted Acting Governor Krishna Bahadur Manandhar as saying that NRB had increased ‘risk weight’ provisioning to 150 percent in the real estate sector against 100 percent in other sectors.

He further said increased cash reserve ratio (CRR) to 5.5 percent from 5 percent was meant to discourage banks and financial institutions from investing in high risk ventures.