NRB issued repos eight times in last month of FY
KATHMANDU, JUL 12 -
The Nepal Rastra Bank (NRB) issued repos eight times in the last month of the current fiscal year to ease the liquidity crunch in banking system. The repos were worth Rs 20 billion.
The central bank had issued repos four times during mid-May to mid-June and thrice during mid-April to Mid-May. “Banks and financial institutions (BFIs) are subscribing the entire repo amount in need and a little amount in other occasions,” said Bhaskarmani Gyawali, spokesperson of the NRB. “The liquidity crunch is easing.” He said the there has been some improvement in the inter-bank lending in the last 10 days. “After we increased the repayment period of inter-bank lending, inter-bank transactions have been better,” he said.
As per the new facility introduced on June 28, crisis-hit BFIs can borrow loans from other BFIs by putting up good loans and other types of assets as collateral for a period of six months. As per the earlier provision, inter-bank loans used to mature in a week. Given the lender BFIS not trusting borrowing BFIs amid one after another financial institutions landing in trouble, the central bank eased the policy on inter-bank lending.
Lately, inter-bank lending rate has come down to 6 percent from above 10 percent a few months ago. With the improvement in the liquidity situation, some crisis-hit BFIs are feeling relief.
The central bank has opened fiver windows to ease the liquidity crunch including repo, refinancing, special refinancing, and lender of last resort, besides increasing the repayment period of inter-bank loans.
Bankers say the liquidity crunch will ease in the last month of the fiscal year along with the rise in government expenditure. Regarding the extension of the repayment period of inter-bank loans, they say the central bank should bring a clear policy on provisioning too. They demanded the monetary policy not include any provision of provisioning such loans.
Given several banks providing inter-bank loans worth Rs 650 million to troubled Nepal Share Market and Finance, bankers are demanding that such loans should not be shown in provisioning, fearing that their profits may come down.
NRB, however, has not decided in this regard. “We are discussing other options,” said an NRB official.
Source: Kantipur
The Nepal Rastra Bank (NRB) issued repos eight times in the last month of the current fiscal year to ease the liquidity crunch in banking system. The repos were worth Rs 20 billion.
The central bank had issued repos four times during mid-May to mid-June and thrice during mid-April to Mid-May. “Banks and financial institutions (BFIs) are subscribing the entire repo amount in need and a little amount in other occasions,” said Bhaskarmani Gyawali, spokesperson of the NRB. “The liquidity crunch is easing.” He said the there has been some improvement in the inter-bank lending in the last 10 days. “After we increased the repayment period of inter-bank lending, inter-bank transactions have been better,” he said.
As per the new facility introduced on June 28, crisis-hit BFIs can borrow loans from other BFIs by putting up good loans and other types of assets as collateral for a period of six months. As per the earlier provision, inter-bank loans used to mature in a week. Given the lender BFIS not trusting borrowing BFIs amid one after another financial institutions landing in trouble, the central bank eased the policy on inter-bank lending.
Lately, inter-bank lending rate has come down to 6 percent from above 10 percent a few months ago. With the improvement in the liquidity situation, some crisis-hit BFIs are feeling relief.
The central bank has opened fiver windows to ease the liquidity crunch including repo, refinancing, special refinancing, and lender of last resort, besides increasing the repayment period of inter-bank loans.
Bankers say the liquidity crunch will ease in the last month of the fiscal year along with the rise in government expenditure. Regarding the extension of the repayment period of inter-bank loans, they say the central bank should bring a clear policy on provisioning too. They demanded the monetary policy not include any provision of provisioning such loans.
Given several banks providing inter-bank loans worth Rs 650 million to troubled Nepal Share Market and Finance, bankers are demanding that such loans should not be shown in provisioning, fearing that their profits may come down.
NRB, however, has not decided in this regard. “We are discussing other options,” said an NRB official.
Source: Kantipur
