Nepal has announced a policy of blacklisting institutions for issuing bank checks without sufficient balance in the account, governor of the Nepal Rastra Bank (NRB) said here Monday.

"Control of increase in the number of cases of checks bouncing in the absence of adequate cash balance is the main purpose of the new provision," Bijaya Nath Bhattarai, governor of NRB, the central bank, told reporters.

The check issuer, however, would be given a seven-day notice to settle the payment before the process of blacklisting was initiated, Bhattarai quoted Monetary Policy of NRB released here Sunday for the current Nepali fiscal year (July 16, 2006-July 15, 2007) as saying.

The annual policy has also scrapped additional 20 percent provisioning while extending educational loans.

"The provision is expected to bring down the current interest rate by at least one percentage point," Bhattarai noted.

The policy has relaxed the earlier provision of raising the paid-up capital of commercial banks to 1 billion Nepali rupees (14. 28 million U. S. dollars) by mid-July 2009.

"As per the new provision, commercial banks would be allowed to raise the capital to 1 billion rupees even by combining capital adjustment fund created by allocation of a certain portion of profits," he added.

Source: Xinhua