Nepal Purbadhar

सोमवार, बैशाख ३, २०८१
Monday, April 15, 2024

सोमवार, बैशाख ३, २०८१
Monday, April 15, 2024

The Federation’s statement will affect the construction of Advance planning

KATHMANDU:  The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said the recently announced monetary policy by Nepal Rastra Bank would create more pressure on the liquidity situation in the financial market. Issuing a press statement on Friday, the representative organization of Nepal’s private sector stated that the monetary policy carries a policy of reducing expenses by controlling credit rather than increasing the source of foreign exchange earnings.

The policy has not been able to cover the concrete measures of import substitution and export promotion. “This narrow-minded policy is going to squeeze the private sector investment making it challenging for the government to achieve the economic growth of 8 percent as set by the current budget, ” reads the statement. If the statutory liquidity ratio is increased by two percentage points, the additional amount will go from the banks to the central bank. When the bank rate increases from 7 percent to 8.5 percent, it will lead to an increase in the interest rate.

The monetary policy has increased Cash Reserve Ratio (CRR) by one percentage point to 4 percent, a move that is expected to send money worth Rs 50 billion to the central bank. Similarly, Statutory Liquidity Ration (SLR) has been increased by 2 percentage points paving the way to the flow of an additional amount of money to the NRB from the market. The rise of interest rates from 7 percent to 8.5 percent will push up the interest rate in the banking system. The statement, however, says the provisions such as lowering the interest rate on loans flowing to the productive sector compared to other businesses, maintaining refinancing facilities for businesses heavily affected by Covid-19, and re-registration facilities for small entrepreneurs are welcome steps taken by the monetary policy.

The policy states that alternative sources will be sought for startups. However, the document is silent on the possibility of giving project loans to small entrepreneurs. The FNCCI also requests the implementation of a system in which loans can be sanctioned against the project mortgage stating that such a move will create an environment for small enterprises that have been making a major contribution to export promotion and import substitution.

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