Saturday, February 16, 2019

Private sector asks premier's help to lower interest rate

Going against the free market policy, the private sector has today approached the Prime Minister KP Sharma Oli and asked him to pressurise the banks and financial institutions (BFIs) to lower the interest rate.
The team led by Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Bhawani Rana went to the Prime Minister's official resident Baluwater to ask him to lower the interest rates between 7 per cent and 9 per cent for productive sector. The unpredictable interest rate has hit the industries, the private sector champions said, suggesting the Prime Minister ways to suppress the interest against the free market economy.
The suppressed interest rate is not only against the free market norms, but also creates higher loan demand again making the loanble fund much scarcer. Likewise, the direct approach to the premier – for interest rates complain – is also not going to strengthen the institutions like central bank and Finance Ministry. The central bank, though, is an autonomous regulatory body of the financial market by law, the government – especially the Finance Ministry – has been lately treating it as a department of the ministry. The weak institutions will eventually not help make a strong, independent and sovereign economy. The Oli government has been – during its one year performance – blamed for destroying the institutions and centralising the power to Baluwater, which will further weaken the institutional and structural pillars of the economy.
The move, though, is also going to weaken the governance and push the institutional reforms to backseat, the premier urged the banks not to impose interest rate arbitrarily. But the banks – majority of them – have the private sector as their promoter.
Directing the finance minister Dr Yuba Raj Khatiwada and central bank Governor Dr Chiranjivi Nepal – who were also present during the meeting – to talk to the bankers on entrepreneurs' complaints, the premier also urged the investors to increase investment on productive sectors that can prop up the economy.
The greed of more profits is not good, the communist premier Oli said, adding that it is not good that banks float loan on one condition and impose interest arbitrarily.
Speaking during the Nepal Entrepreneur Summit 2019 on Thursday, finance ministry Khatiwada also said that the profit should be socially accepted, but he did not mentioned how much is socially accepted. The government lately seems to be preparing the ground to put the ceiling in profits – which will be detrimental to the economic growth – and also discourage entrepreneurship.

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