Birgunj, September 24:

A large chunk of capital has been draining out because of low interest rate of Nepali banks in comparison to Indian banks.

Banking and financial experts have suggested an investment-friendly environment and industrial security to stop capital flight from Nepal. “There is a huge demand for capital in India because of investment-friendly environment,” said Bijaya Kumar Sarawagi, chairman of Birgunj Finance Ltd, adding that India has also increased interest rates in deposit and in loan.

Nepali commercial banks offer three to five per cent interest rates and finance companies offer six to eight per cent, whereas Indian banks in bordering areas offer nine to 12 per cent interest rates.

Nepali banks charge six to nine per cent and finance companies charge nine to 12 per cent interest on loans, whereas Indian banks charge 13 to 15 per cent. “”If the government does not bring any effective policy, capital will continue to go to India,” said Ganesh Lath, president of BCCI.

Last year, the capital flight to India has been calculated at around Rs 500 million from Birgunj only.

“Even after restoration of loktantra, there is no stability as insecurity, attacks, bandhs, strikes, threats, kidnappings, extortions and ransoms has been continuing,” he blamed the government.