What bankers want
KATHMANDU, JUL 14 -
The banking sector that struggled throughout this fiscal year to manage the liquidity crunch and restore depositors’ faith is expecting that the new budget will address its problems.
Although the Nepal Rastra Bank’s measures announced Tuesday provided much needed relief to banks and financial institutions (BFIs), bankers say the budget should come up with a long-term policy measures.
With the liquidity crisis threatening to turn into a full-fledged financial crisis, some bankers even say the budget should come up with a bailout package. They say there should be confidence building measures in the budget to ensure that BFIs do not sink. “The government should not hesitate to bring bailout programmes as the banking sector is still at risk,” said Rajendra Man Shakya, president of Nepal Finance Companies’ Association.
With B and C class financial institutions landing in trouble due to liquidity crunch and bad governance, people’s faith in the sector is declining.
Shakya said although the liquidity situation has eased a bit due to recovery of loans in the last quarter, the situation yet to improve completely. “If the current situation continues, we may not be able to return back deposits before Dashain,” said Shakya, seeking some government measures that would encourage institutional depositors to deposit their money in FIs.
Some BFIs failed to manage liquidity properly as they made long-term financing despite having short-term resources. When huge withdrawals were demanded, they got into trouble. NIC bank CEO Sashin Joshi said the government should open the window for long-term resource collection which would help banks to finance long-term projects such as hydropower projects.
With the NRB relaxing realty loans and margin lending on Tuesday, bankers want some fiscal measures too to bring back people’s confidence in banking institutions. “The government should remove the capital gain tax in realty and stock as it has not helped the government’s revenue collection much,” said Bank of Asia CEO Parsuram Kuwar Chhetri. Currently, the government has been imposing capital gain tax of 10 percent.
The central bank on Tuesday had allowed BFIs to renew realty loans for one more year if the loanee pays all outstanding interests. The central bank also increased the ceiling of home loans to Rs 8 million. These measures are expected to help BFIs keep their balance sheet good and their realty sector exposure will come down.
With the central bank allowing BFIS to decide on the margin lending level, it is expected to help boost the share market. Earlier banks were allowed to provide margin loans loan up to 60 percent of the average market value of the shares put up as collateral.
However, Chhetri seeks further relaxations in the realty sector through the budget. “The government should allow foreigners to purchase apartments in Nepal which will help the housing sector,” said Chhetri. With the government mulling reviewing the income source disclosure provision while depositing money more than Rs 1 million, bankers sought a negative income source disclosure provision.
Source: Kantipur
The banking sector that struggled throughout this fiscal year to manage the liquidity crunch and restore depositors’ faith is expecting that the new budget will address its problems.
Although the Nepal Rastra Bank’s measures announced Tuesday provided much needed relief to banks and financial institutions (BFIs), bankers say the budget should come up with a long-term policy measures.
With the liquidity crisis threatening to turn into a full-fledged financial crisis, some bankers even say the budget should come up with a bailout package. They say there should be confidence building measures in the budget to ensure that BFIs do not sink. “The government should not hesitate to bring bailout programmes as the banking sector is still at risk,” said Rajendra Man Shakya, president of Nepal Finance Companies’ Association.
With B and C class financial institutions landing in trouble due to liquidity crunch and bad governance, people’s faith in the sector is declining.
Shakya said although the liquidity situation has eased a bit due to recovery of loans in the last quarter, the situation yet to improve completely. “If the current situation continues, we may not be able to return back deposits before Dashain,” said Shakya, seeking some government measures that would encourage institutional depositors to deposit their money in FIs.
Some BFIs failed to manage liquidity properly as they made long-term financing despite having short-term resources. When huge withdrawals were demanded, they got into trouble. NIC bank CEO Sashin Joshi said the government should open the window for long-term resource collection which would help banks to finance long-term projects such as hydropower projects.
With the NRB relaxing realty loans and margin lending on Tuesday, bankers want some fiscal measures too to bring back people’s confidence in banking institutions. “The government should remove the capital gain tax in realty and stock as it has not helped the government’s revenue collection much,” said Bank of Asia CEO Parsuram Kuwar Chhetri. Currently, the government has been imposing capital gain tax of 10 percent.
The central bank on Tuesday had allowed BFIs to renew realty loans for one more year if the loanee pays all outstanding interests. The central bank also increased the ceiling of home loans to Rs 8 million. These measures are expected to help BFIs keep their balance sheet good and their realty sector exposure will come down.
With the central bank allowing BFIS to decide on the margin lending level, it is expected to help boost the share market. Earlier banks were allowed to provide margin loans loan up to 60 percent of the average market value of the shares put up as collateral.
However, Chhetri seeks further relaxations in the realty sector through the budget. “The government should allow foreigners to purchase apartments in Nepal which will help the housing sector,” said Chhetri. With the government mulling reviewing the income source disclosure provision while depositing money more than Rs 1 million, bankers sought a negative income source disclosure provision.
Source: Kantipur
