Bankers call for fresh measures to revive markets
KATHMANDU, JUL 10 -
With the annual budget scheduled to be announced on July 14, the Nepal Rastra Bank (NRB) has expedited its work on drafting the new monetary policy.
The central bank on Friday held discussions with three major associations of the country’s financial industry—Nepal Bankers’ Association (NBA), Development Bankers’ Association of Nepal (DBAN) and Nepal Finance Companies’ Association (NFCN).
Every year, the central bank unveils its monetary policy after the budget presentation, supporting the financial and development target of the budget. With the domestic financial sector reeling under a liquidity crunch and looming systemic risk, the new monetary policy is crucial.
Bankers say NRB should bring the new policy keeping in mind the existing problems of the financial sector. Bankers have suggested for restructuring of realty loans given the amount of lending gone to the realty sector and the risk it posses. “We have suggested that loans serving interest should be rescheduled once,” said Ashoke Rana, president of Nepal Bankers’ Association (NBA). Banks and financial institutions (BFIs) have invested around 110 billion in the realty sector.
NBA has also suggested increasing the limit of home loans to Rs 10 million from the current Rs 6 million that will not be categorised under realty loans. The bankers have suggested taking measures that would build confidence in the capital market. “The capital gain tax must be slashed,” said Rana.
The capital market has been witnessing a bearish trend for the last two years and the market index recently plunged to a five-year low before bouncing back to some extent.
Rana said the central bank should take appropriate measures to ease the ongoing liquidity crunch in the banking sector. Currently, the central bank has opened four doors to address the liquidity crisis—refinancing, special refinancing, repo and lender of last resort.
Development Bankers’ Association President Manoj Goyal said NRB should let all the bank and financial institutions to get refinancing. “A certain amount of refinancing should be made immediately after the demand,” he said. B and C class financial institutions are complaining that the central bank is delaying in providing refinancing even when they are in dire need of financial resources to return deposits back to customers.
The monetary policy should focus on increasing investment in the infrastructure sector. “The central bank can create a fund to finance the infrastructure sector through financial institutions,” he said, suggesting easing procedures for non resident Nepalis to deposit and withdraw money could help. “It will help ease the liquidity crunch,” he said. Goyal was also of the view that the cash reserve ratio (CRR) could be reduced to a certain level to ease the liquidity crunch. Currently, NRB has maintained the CRR at 5.5 percent.
The central bank is yet to take any decision regarding the measures to be taken in the new monetary policy to address the current problems. “We are undergoing consultations now,” said NRB Spokesperson Bhaskarmani Gyawali.
Source: Kantipur
With the annual budget scheduled to be announced on July 14, the Nepal Rastra Bank (NRB) has expedited its work on drafting the new monetary policy.
The central bank on Friday held discussions with three major associations of the country’s financial industry—Nepal Bankers’ Association (NBA), Development Bankers’ Association of Nepal (DBAN) and Nepal Finance Companies’ Association (NFCN).
Every year, the central bank unveils its monetary policy after the budget presentation, supporting the financial and development target of the budget. With the domestic financial sector reeling under a liquidity crunch and looming systemic risk, the new monetary policy is crucial.
Bankers say NRB should bring the new policy keeping in mind the existing problems of the financial sector. Bankers have suggested for restructuring of realty loans given the amount of lending gone to the realty sector and the risk it posses. “We have suggested that loans serving interest should be rescheduled once,” said Ashoke Rana, president of Nepal Bankers’ Association (NBA). Banks and financial institutions (BFIs) have invested around 110 billion in the realty sector.
NBA has also suggested increasing the limit of home loans to Rs 10 million from the current Rs 6 million that will not be categorised under realty loans. The bankers have suggested taking measures that would build confidence in the capital market. “The capital gain tax must be slashed,” said Rana.
The capital market has been witnessing a bearish trend for the last two years and the market index recently plunged to a five-year low before bouncing back to some extent.
Rana said the central bank should take appropriate measures to ease the ongoing liquidity crunch in the banking sector. Currently, the central bank has opened four doors to address the liquidity crisis—refinancing, special refinancing, repo and lender of last resort.
Development Bankers’ Association President Manoj Goyal said NRB should let all the bank and financial institutions to get refinancing. “A certain amount of refinancing should be made immediately after the demand,” he said. B and C class financial institutions are complaining that the central bank is delaying in providing refinancing even when they are in dire need of financial resources to return deposits back to customers.
The monetary policy should focus on increasing investment in the infrastructure sector. “The central bank can create a fund to finance the infrastructure sector through financial institutions,” he said, suggesting easing procedures for non resident Nepalis to deposit and withdraw money could help. “It will help ease the liquidity crunch,” he said. Goyal was also of the view that the cash reserve ratio (CRR) could be reduced to a certain level to ease the liquidity crunch. Currently, NRB has maintained the CRR at 5.5 percent.
The central bank is yet to take any decision regarding the measures to be taken in the new monetary policy to address the current problems. “We are undergoing consultations now,” said NRB Spokesperson Bhaskarmani Gyawali.
Source: Kantipur
