Private sector seeks interest rate reduction through Monetary Policy

KATHMANDU, JUNE 15

The private sector has urged Nepal Rastra Bank (NRB) to bring down the interest rate on loans through the Monetary Policy for the upcoming fiscal year.

Submitting a suggestion note to NRB Governor Maha Prasad Adhikari today, the Confederation of Nepalese Industries (CNI) stated that the business community is reeling under acute crisis and that the central bank should facilitate businesses by bringing down the interest rate.

The central bank is expected to bring the Monetary Policy for fiscal 2020-21 by mid-July and is currently preparing the draft of the macroeconomic policy.

“Bringing down the interest rate will not only help in the revival of businesses but is also required to promote investment and give momentum to the economy,” said Satish Kumar More, president of CNI.

Along with this, the Monetary Policy should also focus on capital formation, address liquidity issues, restructure existing loans, extend the loan repayment period and ensure availability of ample subsidised loans for businesses affected by the COVID-19 pandemic.

Welcoming the government’s decision to provide subsidised loans worth Rs 100 billion to businesses through refinancing facility of NRB and concessional loans worth Rs 50 billion through a separate fund, CNI said that the government and central bank should immediately mobilise these loans to the business community and ensure access of all businesses to such loans.

The government through the budget for next fiscal year had announced Rs 150 billion worth of loans would be provided to businesses at five per cent interest rate to help them tackle the challenges caused by the coronavirus.

As per CNI, businesses should get such subsidised loan worth at least Rs 20 million while access to such loans should be increased for small and medium scale industries that are contributing to the economy from the local level.

“Industries and businesses of all types are in need of special treatment from the government today. While a few things have been addressed through the budget, the central bank should utilise the Monetary Policy in further boosting the morale of businesses in the country,” added More.

Meanwhile, Governor Adhikari assured that the Monetary Policy will be inclined towards addressing challenges caused by the pandemic and assured that NRB would take suggestions from different stakeholders and incorporate them in the Monetary Policy to ensure macroeconomic stability in the country. “The primary challenge lies in giving momentum to economic activities and creating an environment for economic growth. The Monetary Policy will dwell on addressing these issues,” he added.

A version of this article appears in e-paper on June 16, 2020, of The Himalayan Times.