Kathmandu, September 16

Finance Minister Yubaraj Khatiwada has urged the Employees Provident Fund (EPF) to help stabilise the lending rates of financial institutions. He stated that the non-banking financial institutions like EPF and Citizens Investment Trust (CIT) had distorted the lending rates in the past as they were desperate to get higher interest rates on their deposits and started transferring funds from one bank to another in very short intervals of time. As a result banks and financial institutions were compelled to raise the deposit rates, the finance minister informed.

Addressing an event to mark the 57th year of operation of the EPF, Finance Minister Khatiwada said that EPF has to play a role to stabilise the deposit interest rate in the financial market. To control the hike in interest rates the central bank so far has introduced a provision that institutional depositors cannot withdraw deposits for at least one quarter of the fiscal and banks and financial institutions can offer one percentage point additional interest rate on the declared (published) rate while bidding for institutional deposits.

“Interest rates should be predictable to ensure operation of industries and businesses without them having to suffer from unpredictable and high lending rates like in past one-and-a-half years,” said Khatiwada.