RSP gives Rastra Bank 7-point suggestion for monetary policy, stresses share collateral loan reform and CAR improvement

Rastriya Swatantra Party (RSP) has submitted a seven point suggestion to Nepal Rastra Bank for the upcoming fiscal year's monetary policy. The party's central monetary and capital market department handed over the suggestions to Rastra Bank Governor Prof. Dr. Bishwonath Paudel, focusing on reforming share collateral loans, improving liquidity, raising banks' capital adequacy ratio, and expanding credit flow.

On share collateral loans, the party suggested setting different loan-to-value (LTV) ratios based on a company's financial strength, fixing the share-collateral loan limit based on total credit flow, and easing restrictions on banks and financial institutions investing in the capital market.

The party also called for greater participation of institutional investors such as the Employees Provident Fund, Social Security Fund, mutual funds, and Citizens Investment Trust to deepen the capital market. It recommended implementing a Central KYC platform with integration between banks, Mero Share, and brokers to make the investment process faster and simpler.

On interest rates, the suggestions call for making the interest rate corridor more effective and reducing volatility to make rates more predictable through scientific methods. The party also proposed allowing capable brokers to issue short-term debentures and to provide short-term loans against broker and margin receivables as collateral.

Other suggestions include scrapping the dividend distribution limit currently imposed on microfinance institutions, and allowing companies facing capital adequacy ratio (CAR) pressure to issue rights shares based on need and justification, to help them expand business more easily.