NRB governor urges BFIs to adopt self-regulation
KATHMANDU:
Nepal Rastra Bank (NRB) Governor Chiranjibi Nepal has urged banks and financial institutions (BFIs) to support the central bank by following prudent norms and practices of the banking business. Self-regulation will not only avoid interference of the regulator on respective BFIs, it will also generate confidence among the general public, according to him.
Speaking at an interaction programme organised by the Independent Business News titled ‘Interaction with newly appointed Governor of NRB’, Nepal said that he has a lot of trust in the private sector and he seeks similar kind of trust from the private sector towards NRB in return.
The central bank, as per the governor, is willing to play the role of a facilitator for the BFIs to achieve common goal, like, expanding access to finance to a large number of population, promoting inclusive finance and financial literacy, minimising informal economy and combating money laundering issues.
“Ultimately, our common goal is to support in boosting the economic growth of the country,” said the governor.
While sounding optimistic that the BFIs will operate in a disciplined manner, he also warned that he would be forced to take a strong stance if they strayed.
In the programme, Sashin Joshi, CEO of NIC Asia Bank and former president of Nepal Bankers’ Association (NBA)
alleged that NRB had deviated from its major motto of price stability in the past and introduced instruments like interest rate corridor, base rate and spread rate to control the interest rate.
“These tools distorted the market,” said Joshi, adding even though this has led to a situation where borrowers are able to get loans at low interest rates, depositors are being deprived of competitive interest rates in deposits.
Similarly, NBA President Upendra Poudel sought simplification on the process of agriculture lending, citing without proper value chain management of agriculture sector, it is difficult for banks to expand loans in the sector, particularly in production.
As per the central bank’s provision, commercial banks need to lend 12 per cent of their total loan portfolio in agriculture and hydropower sectors by the end of current fiscal 2014-15. The provision does not allow counting the loan extended in agro-processing in the same bracket, as per Poudel.
Likewise, Chandra Prasad Dhakal, chairman of IME Group, suggested the central bank to announce incentives for remitters to encourage them to send remittance from formal channel. Growth of remittance accounted for only 2.9 per cent in first seven months of this fiscal; whereas in the same period last fiscal, remittance inflow had surged by 38.6 per cent.
Source: THT
