FNCCI urges NRB to bring down interest rate on loans by three percentage points

Kathmandu, April 12

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged Nepal Rastra Bank (NRB) to bring down the interest rate on loans by three percentage points.

Meeting the newly appointed Governor Maha Prasad Adhikari, a delegation of FNCCI led by its President Bhawani Rana suggested that the central bank should bring down interest rate on all types of loans for businesses amid the ongoing crisis caused by the coronavirus pandemic and help them revive their businesses.

Citing that all trading houses and businesses have been shut since one month and are struggling financially, the FNCCI delegation suggested NRB to take different business and industry-friendly steps to help businesses survive the devastation of the coronavirus pandemic.

FNCCI has also urged the central bank to manage refinancing loan facility for businesses at two per cent to pay interest of businesses in the tourism, manufacturing, agriculture and export sectors. The maturity period of such loans should be two years. Similar loan facility should be offered to small and medium scale enterprises with one year of repayment time, added FNCCI.

According to FNCCI, such loans acquired through the refinancing facility of the government shall be used to pay salaries of workers for one year.

The NRB had recently halted loan recovery from businesses till mid-July and asked banks and financial institutions to provide 10 per cent discount on interest rate in case any borrower makes monthly/quarterly payment by mid-April. However, FNCCI has told the governor that the interest rate discount should not be limited to only term loans and should be extended for all forms of loans, including working capital loan and trust receipt loans.

While FNCCI recommended the central bank to make the capital-cumdeposit ratio flexible, it also asked NRB to reduce the difference in interest rate between deposits and loans by 0.5 percentage point.

On the occasion, NRB Governor Adhikari informed that a committee is studying the impact of the coronavirus on businesses and the economy. “FNCCI’s recommendations will help the central bank to properly assess the impact of the pandemic. NRB will coordinate with the private sector and facilitate them through different means,” he added.

A version of this article appears in e-paper on April 13, 2020 of The Himalayan Times.