KATHMANDU, March 30 (Xinhua) -- Nepal's central bank has paved the way for domestic commercial banks to borrow from foreign banks and financial institutions to address the liquidity crunch in banking system for the last few months, a senior official of the Nepal Rastra Bank (NRB) said.

It is for the first time that Nepali banks have been allowed to borrow from abroad. Other firms however can borrow from abroad.

"A meeting of the board of directors of the central bank on Thursday endorsed a proposal on allowing domestic commercial banks to borrow from foreign banks and financial institutions," Rajendra Pandit, assistant spokesperson of NRB, told Xinhua on Friday.

According to him, domestic banks could borrow loans up to 25 percent of their core capital.

"The banks can borrow loans for the period from one year to five years to finance only in the productive sector such as agriculture, tourism, hydropower and outer infrastructure projects," said Pandit. "Borrowed loans from abroad cannot be used to lend to the real estate, share market and imports."