IMF mission to review health of financial system
KATHMANDU, July 18:
A mission of International Monetary Fund (IMF) has arrived in Nepal to carry out scooping exercise to understand the depth of the problem seen in the country´s financial sector.
The mission held interactions with senior government and Nepal Rastra Bank (NRB) officials over the past two days.
“It is mainly studying why the liquidity shortage hit the banking system even as the extent of non-performing loans has not gone up significantly over the past year,” said a source.
Talking to Republica, the source added that the mission will scan the existing balance sheets of the banks and financial institutions and look into other possible ´weaknesses´ in their statements.
The mission will also chart out all probable causes of the liquidity shortage, and assess vulnerability and other weaknesses in the financial system. It is also review the steps taken by the authorities so far to prevent the crisis from spreading across the system.
“Particularly it will assess the effectiveness and limitations of the existing measures. The goal is to mitigate the risks of existing vulnerabilities turning into a full blown financial crisis,” the source added.
The IMF team is also expected to make suggestions on measures to plug the possibility of ´cooking´ the financial statements and the practice of dodging the regulatory authority by using different means to issue loans in the sectors tagged as vulnerable.
The mission will also look into the contingency planning framework, which the central bank has adopted, laying down actions it will take to deal with the problem in different scenarios.
Source: Republica
A mission of International Monetary Fund (IMF) has arrived in Nepal to carry out scooping exercise to understand the depth of the problem seen in the country´s financial sector.
The mission held interactions with senior government and Nepal Rastra Bank (NRB) officials over the past two days.
“It is mainly studying why the liquidity shortage hit the banking system even as the extent of non-performing loans has not gone up significantly over the past year,” said a source.
Talking to Republica, the source added that the mission will scan the existing balance sheets of the banks and financial institutions and look into other possible ´weaknesses´ in their statements.
The mission will also chart out all probable causes of the liquidity shortage, and assess vulnerability and other weaknesses in the financial system. It is also review the steps taken by the authorities so far to prevent the crisis from spreading across the system.
“Particularly it will assess the effectiveness and limitations of the existing measures. The goal is to mitigate the risks of existing vulnerabilities turning into a full blown financial crisis,” the source added.
The IMF team is also expected to make suggestions on measures to plug the possibility of ´cooking´ the financial statements and the practice of dodging the regulatory authority by using different means to issue loans in the sectors tagged as vulnerable.
The mission will also look into the contingency planning framework, which the central bank has adopted, laying down actions it will take to deal with the problem in different scenarios.
Source: Republica
