Experts opinion on the increased interbanking interest rate
Sun, May 1, 2016 10:46 AM on Latest, Experts Speak, Featured, Stock Market,
The current interbank interest is increasing. Earlier it was less than 1% and at present it has increased to 5%. What is the reason behind its increment and till how long will it extend? Will this push market interest rate up?
Here are some of the opinions of the experts on the same issue.
Analraj Bhattarai
Former CEO, Commerz and Trust Bank
Currently, huge amount of money has been frozen in Nepal Rastra Bank due to which liquidity seems lesser in the market resulting higher short term interest rate. Once the upcoming budget announce in Jestha , the government expenditure on development activities will be increased which will further ease liquidity in market .
Rupak Shrestha,
Treasury Department, Citizens Bank International Limited
Nepal Rastra Bank has issued 5 development bonds consecutively of Rs 62 arba with the maturity period of 8, 11, 12, 13 and 15 years. The bonds were issued to absorb the excess liquidity in the market. Banks have to maintain Cash Reserve Ratio (CRR) every week. If banks fail to maintain CRR, NRB will take action against respective banks. Due to this reason banks have to pay more interest.
Finally, loan disbursement has also increased shortening the deposits of the banks, this is also increasing interbank interest rate.
Some of the bonds that have been issued earlier by NRB are to mature soon. So after the maturation of some of the bonds, there will be cash flow in the market.
Currently, huge amount of money has been frozen in Nepal Rastra Bank due to which liquidity seems lesser in the market resulting higher short term interest rate. Once the upcoming budget announce in Jestha , the government expenditure on development activities will be increased which will further ease liquidity in market .
Rupak Shrestha,
Treasury Department, Citizens Bank International Limited
Nepal Rastra Bank has issued 5 development bonds consecutively of Rs 62 arba with the maturity period of 8, 11, 12, 13 and 15 years. The bonds were issued to absorb the excess liquidity in the market. Banks have to maintain Cash Reserve Ratio (CRR) every week. If banks fail to maintain CRR, NRB will take action against respective banks. Due to this reason banks have to pay more interest.
Finally, loan disbursement has also increased shortening the deposits of the banks, this is also increasing interbank interest rate.
Some of the bonds that have been issued earlier by NRB are to mature soon. So after the maturation of some of the bonds, there will be cash flow in the market.
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