Call for relief package to address liquidity crisis
KATHMANDU, JUL 02 -
Bankers, economists and the private sector have asked for a relief package in the upcoming budget to address the current liquidity crunch in the financial sector.
They also warned that the current problem in the financial sector might hit the entire economy if timely interventions were not made. “The current problem might carry a systemic risk and therefore should be taken seriously,” said Jhapat Bohara at a seminar organised by the Development Bankers Association Nepal on Friday. “The government, if needed, should think of a bailout package through the new budget.”
Former finance minister Prakash Chandra Lohani said that the genesis of the current crisis was excessive lending to the realty sector. Lohani also blamed Nepal Rastra Bank (NRB) for its lax supervision of banks and financial institutions (BFIs). “There is a problem of asset-liability mismatch in the balance sheet of some BFIs,” said Lohani. “It did not happen at once, but NRB’s audit failed to point out such issues in the beginning.” At a time when banks are reluctant to provide inter-bank lending, Lohani urged the banking community not to be hesitant in providing credit against good loans and quality assets to institutions facing a cash crunch. “NRB should facilitate such inter-bank lending,” said Lohani.
NRB has said it is working on measures to address the liquidity crunch and will take assistance from the government in this connection.
With one after another B and C class financial institution suffering from an acute liquidity crunch, they urged the central bank to rescue institutions whose assets value was greater than their liabilities.
With NRB’s top officials talking tough against institutions involved in corrupt practices and financial embezzlement, head honchos of BFIs have urged the central bank not to let them die but to take against people involved in malpractices. “People involved in financial embezzlement should be punished, but one should not let the financial institution die because the stakes of lots of innocent people are associated with a single financial institution,” said Ram Shant Shrestha, former president of the Nepal Finance Company Association.
Source: Kantipur
Bankers, economists and the private sector have asked for a relief package in the upcoming budget to address the current liquidity crunch in the financial sector.
They also warned that the current problem in the financial sector might hit the entire economy if timely interventions were not made. “The current problem might carry a systemic risk and therefore should be taken seriously,” said Jhapat Bohara at a seminar organised by the Development Bankers Association Nepal on Friday. “The government, if needed, should think of a bailout package through the new budget.”
Former finance minister Prakash Chandra Lohani said that the genesis of the current crisis was excessive lending to the realty sector. Lohani also blamed Nepal Rastra Bank (NRB) for its lax supervision of banks and financial institutions (BFIs). “There is a problem of asset-liability mismatch in the balance sheet of some BFIs,” said Lohani. “It did not happen at once, but NRB’s audit failed to point out such issues in the beginning.” At a time when banks are reluctant to provide inter-bank lending, Lohani urged the banking community not to be hesitant in providing credit against good loans and quality assets to institutions facing a cash crunch. “NRB should facilitate such inter-bank lending,” said Lohani.
NRB has said it is working on measures to address the liquidity crunch and will take assistance from the government in this connection.
With one after another B and C class financial institution suffering from an acute liquidity crunch, they urged the central bank to rescue institutions whose assets value was greater than their liabilities.
With NRB’s top officials talking tough against institutions involved in corrupt practices and financial embezzlement, head honchos of BFIs have urged the central bank not to let them die but to take against people involved in malpractices. “People involved in financial embezzlement should be punished, but one should not let the financial institution die because the stakes of lots of innocent people are associated with a single financial institution,” said Ram Shant Shrestha, former president of the Nepal Finance Company Association.
Source: Kantipur
