NBA voices against the new directives of NRB; Restrictions on multiple front will not only affect banks but economy as a whole

Today Nepal Bankers' Association (NBA) held a meeting among the commercial bankers to discuss the directives issued by Nepal Rastra Bank (NRB) and the general banking environment. The meeting has concluded that some of the points will have a negative impact in Nepali economy and the banking sector.

The new directive regarding the average interest rate spread calculation method, according to NBA, will reduce the profit of the sector by more than Rs 30 arba or 25%.

Similarly the 2% increase in counter cyclical buffer will increase the capital fund ratio from 11% to 13% and this will shrink the banks' credit lending capacity by Rs 150 arba. As per NBA, this will hinder the goal of achieving 8.5% economic growth rate and 21% credit growth rate.

Likewise, currently only 20% of Nepali population has come under insurance coverage and given the wider geographical coverage of banks, bancassurance agreements has helped to widen the coverage of insurance. Therefore NBA thinks that banning bancassurance is not a good move on anyone's part.

The detailed press release is attached below: