Bankers today asked the central bank to change the method of calculating interest rate spread through the mid-term review of Monetary Policy.
They – at an interaction programme held by the central bank today in Kathmandu – said that the current calculation method will hit the profits of the banks and financial institutions (BFIs). “The provisions aimed at reducing profit of banks will affect the entire banking and financial sector,” they said, urging the Nepal Rastra Bank (NRB) to review such provisions.
The central bank should promote merger and acquisition policy to make the financial sector more reliable and robust, president of Nepal Bankers Association (NBA) Bhuvan Dahal said, adding that the provisions, however, related to spread rate calculation and others have been affecting banks. “The government policies should not affect the income of BFIs as they are expanding their services and network with huge investment in technology and security.”
The association had in August officially objected the central bank’s revision of the formula to calculate the spread rate, which they are mandated to maintain. “The change in the calculation of spread rate will directly affect the income tax being paid by BFIs and also hit their lending capacity,” Dahal said.
According to central bank rule, banks cannot include their interest-earning from investments in government securities while calculating the spread rate as allowed earlier. The central bank has also barred banks from incorporating the earnings from investment in the spread rate calculation.
They – at an interaction programme held by the central bank today in Kathmandu – said that the current calculation method will hit the profits of the banks and financial institutions (BFIs). “The provisions aimed at reducing profit of banks will affect the entire banking and financial sector,” they said, urging the Nepal Rastra Bank (NRB) to review such provisions.
The central bank should promote merger and acquisition policy to make the financial sector more reliable and robust, president of Nepal Bankers Association (NBA) Bhuvan Dahal said, adding that the provisions, however, related to spread rate calculation and others have been affecting banks. “The government policies should not affect the income of BFIs as they are expanding their services and network with huge investment in technology and security.”
The association had in August officially objected the central bank’s revision of the formula to calculate the spread rate, which they are mandated to maintain. “The change in the calculation of spread rate will directly affect the income tax being paid by BFIs and also hit their lending capacity,” Dahal said.
According to central bank rule, banks cannot include their interest-earning from investments in government securities while calculating the spread rate as allowed earlier. The central bank has also barred banks from incorporating the earnings from investment in the spread rate calculation.
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