Wednesday, July 3, 2019

Private sector seeks interest rate stability

The private sector has said asked the central bank to focus on ensuring stability in the interest rate and promoting business growth.
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) – during an interaction on pre-Monetary Policy recommendation – urged to bring down the interest rate to a single digit, which is currently above 13 per cent. The Nepal Rastra Bank (NRB) is preparing to unveil the Monetary Policy for next fiscal year 2019-20 next week.
Citing that the interest rate volatility is the major impeding force behind growth of business and investment the umbrella body of the private sector also reminded the central bank of its 21-point recommendation for Monetary Policy.
The FNCCI had submitted 21-point recommendation for the Monetary Policy for the fiscal year 2019-20 recently. “The high interest rate has discouraged business community,” said FNCCI president Bhawani Rana. “The central bank should bring down the interest spread rate to three per cent from the existing 4.5 per cent,” she said, citing that high interest spread even after all commercial banks have already fulfilled the paid-up capital requirement of Rs 8 billion is unjustifiable.
Among the recommendation, the private sector has also asked the central bank to introduce mandatory provision for banks and financial institutions to make them invest at least 15 per cent of their total loan portfolio in the energy sector. “The FNCCI has also asked the central bank to fix interest rate on energy sector as ‘high and unstable interest rate will raise the production cost and extend the payback period of hydropower projects’,” Rana said, adding that the private sector has asked to make contextual all parameters that are used while calculating the base rate, ensure access of every citizen to banking and financial services, and widen the refinancing pool to Rs 100 billion from the existing Rs 50 billion.

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