NRB opens ´special´ refinancing window
KATHMANDU, June 10:
The central bank today opened a ‘special’ refinancing window for banks and financial institutions to avert any systemic risk due to tight liquidity situation.
“We have opened special refinancing facility to BFIs under Lender of Last Resort to avert systemic risk,” said Nepal Rastra Bank Spokesperson Bhaskar Mani Gyawali.
Though NRB has been providing refinancing facility since April to boost investment on productive sectors, ‘today’s move has increased the amount they can get and is targeted at easing the liquidity crunch,’ he said. “A financial institution can get refinancing facility up to 60 per cent of capital fund at seven per cent interest rate for four months against good loans,” added Gyawali. “But it is a must that they maintained good governance, as the central bank takes note of long- or short-term problem apart from going through its books to check either it’s a managerial or liquidity problem.” The financial institutions should also not exceed their non-performing loans more than five per cent to get the ‘special’ refinancing facility.
President of Nepal Bankers’ Association Ashoke Rana welcomed the central bank move. “It is the most required move in this liquidity-stressed situation,” said Rana, adding that the move would also boost confidence of depositors, as they have recently been confused in the wake of various financial institutions’ ‘failure’.
Due to low depositors’ confidence, deposit mobilisation of commercial banks could not grow at the rate as it used to in the past years. According to NRB data, commercial banks had Rs 647 billion deposit by the end of May. By the end of last fiscal year, they had Rs 617 billion. “The deposit growth rate slowed down in the past couple of months due to low confidence of depositors,” added Rana. “The current tight liquidity situation came also due to liquidity mismatch in the financial institutions.”
Source: THT
The central bank today opened a ‘special’ refinancing window for banks and financial institutions to avert any systemic risk due to tight liquidity situation.
“We have opened special refinancing facility to BFIs under Lender of Last Resort to avert systemic risk,” said Nepal Rastra Bank Spokesperson Bhaskar Mani Gyawali.
Though NRB has been providing refinancing facility since April to boost investment on productive sectors, ‘today’s move has increased the amount they can get and is targeted at easing the liquidity crunch,’ he said. “A financial institution can get refinancing facility up to 60 per cent of capital fund at seven per cent interest rate for four months against good loans,” added Gyawali. “But it is a must that they maintained good governance, as the central bank takes note of long- or short-term problem apart from going through its books to check either it’s a managerial or liquidity problem.” The financial institutions should also not exceed their non-performing loans more than five per cent to get the ‘special’ refinancing facility.
President of Nepal Bankers’ Association Ashoke Rana welcomed the central bank move. “It is the most required move in this liquidity-stressed situation,” said Rana, adding that the move would also boost confidence of depositors, as they have recently been confused in the wake of various financial institutions’ ‘failure’.
Due to low depositors’ confidence, deposit mobilisation of commercial banks could not grow at the rate as it used to in the past years. According to NRB data, commercial banks had Rs 647 billion deposit by the end of May. By the end of last fiscal year, they had Rs 617 billion. “The deposit growth rate slowed down in the past couple of months due to low confidence of depositors,” added Rana. “The current tight liquidity situation came also due to liquidity mismatch in the financial institutions.”
Source: THT
