The Monetary Policy of Nepal Rastra Bank (NRB) for FY 2075/76 has allowed the commercial banks to perform broker services by establishing a subsidiary company. However, none of the banks have established broker subsidiary given the lack of policy framework and working modality to be developed by Security Exchange Board of Nepal (SEBON).
The NRB has opened floor of suggestion for the upcoming monetary policy for FY 2076/77 and the Development Bankers' Association (DBA) has put in 11-points suggestion. They have asked NRB to allow the development banks also to be able to provide brokerage services.
Likewise, they have suggested the interest spread for National level development banks to be kept stable and provide some flexibility to regional level development banks.
The call deposit's limit has been set at 15% for development banks and the DBA has suggested NRB to reconsider it. As per the prevailing rules, the organizations aren't allowed to open saving account and because of which they use call account. The interest rate ceiling kept on call account has already brought discipline and this limit is only further choking the bank and for that reason they have suggested to loosen it.
The DBA also urges NRB to revisit the provisions allowing Development bank to issue letter of credit. The issue was first raised in FY 2074/75 but directions haven't been issued.
The previous flexibility lent on refinancing limit by increasing it to Rs 35 billion from Rs 20 billion had eased the liquidity tightness of BFIs. However, the liquidity problem hasn't been fully addressed, so DBA has suggested NRB to provide more stretching room in refinancing limit and time period.
Similarly, DBA has suggested NRB to think about the practical necessity of deposit insurance as the funds are already very secured.
The NRB has also made it compulsory for development banks to lend to deprived sector and DBA has suggested NRB to provide flexibility in CCD ratio, Capital adequacy ratio, CRR and SLR if the bank has lent more than the set limit in that sector.
Finally, DBA has also emphasized that if the country wants to see big mergers than adequate incentives should also be given.