Kathmandu, May 13

Despite their initial resistance, bankers have finally decided to comply with the direction of Nepal Rastra Bank (NRB) to reduce interest rates on loans by two percentage points.

A meeting of Nepal Bankers’ Association (NBA) — the umbrella organisation representing 27 commercial banks of the country — today decided to slash interest rates on loans as directed by NRB.

“Though bankers have reservations against central bank’s decision, we have decided to implement it as we are obliged to comply with our regulator’s direction,” said Bhuvan Dahal, president of NBA.

Earlier, NRB had directed the banks and financial institutions (BFIs) to provide a discount of two percentage points on the interest rates to minimise the impact of COVID-19 on borrowers, especially the business community. NRB had instructed BFIs to provide the discount to the coronavirus-affected businesses on the interest as of April 12, for a period of three months.

“We will publish a notice on Thursday regarding the decision we have made to implement NRB’s direction. As per the central bank’s direction, the reduced interest rates will be applicable for loans outstanding as of Chaitra-end (April 12) for a maximum period of three months,” said Dahal.

The reduction in interest rates is expected to provide relief to businesses hit by the pandemic. Though industrialists have been seeking interest rates discount of up to five percentage points, bankers have already said it is unrealistic and unscientific.

Initially, bankers had expressed their reservations against the NRB’s direction citing that the facility should be given only to those in need and not to everyone in general.

Similarly, bankers have also been saying that businesses too should provide relief to their customers who have been suffering due to the pandemic.

A version of this article appears in e-paper on May 14, 2020, of The Himalayan Times.

READ ALSO:

• Bankers, industrialists form panel to study interest rate issues