Deputy Governor and NBA President Call for Strategic Reforms to Revive Nepal's Economy

The upcoming monetary policy must hit a careful balance between helping the government achieve high economic growth and managing the challenges of keeping the nation's financial system stable. Speaking at a pre-monetary policy discussion organized by the Society of Economic Journalists Nepal (SEJON), Kiran Pandit, the Deputy Governor of Nepal Rastra Bank, explained that while central bank policies naturally intersect and sometimes clash with government budgets, both must work in close coordination. Pandit emphasized that while supporting economic expansion is a key goal, the central bank's primary duty remains keeping consumer inflation and other vital economic indicators within safe, predictable limits.

At the same forum, commercial bankers raised serious concerns regarding the rising volume of unsold properties and non-banking assets held by local banks, which has now crossed 50 billion rupees. Santosh Koirala, President of the Nepal Bankers' Association and Chief Executive Officer of Machhapuchchhre Bank, urged the central bank to relax and modernize the current strict rules used to classify bad loans and non-banking assets. Koirala pointed out that local banks are facing significant profit pressures due to the ongoing economic slowdown, and immediate policy flexibility is required to jumpstart domestic business activities.

To provide direct relief to struggling borrowers who cannot repay their loans due to the economic recession, Koirala proposed allowing banks to use their internal redemption reserves to distribute bonus shares. Furthermore, he suggested that instead of expanding physically by opening costly new branches, banks should focus on merging existing branches and cutting down unnecessary digital expenses. Banking leaders believe that if the central bank adopts these practical policy adjustments and tweaks liquidity limits, it will successfully clear the current economic stagnation and make the entire financial network more dynamic.