As Nepal Rastra Bank prepares to bring the Monetary Policy for fiscal year 2020-21, the business community has demanded reduction in interest rates on bank loans
As Nepal Rastra Bank prepares to bring the Monetary Policy for fiscal year 2020-21, the business community has demanded reduction in interest rates on bank loans.
The Confederation of Nepalese Industries, Federation of Nepalese Chambers of Commerce and Industry and Nepal Chamber of Commerce have already submitted their recommendations to NRB Governor Maha Prasad Adhikari, urging the central bank to bring down interest rates on bank loans as businesses are unlikely to revive for at least another one year.
The business community has asked NRB to bring down interest rates on loans by up to five percentage points and defer loan repayment period by at least one year. “We had carried out a study on the impact of COVID-19 on businesses and steps that regulatory bodies and the government need to take to help revive businesses.
The first thing required is relief in interest rates by up to five percentage points,” said Anuj Agrawal, vice president of CNI.
According to him, NRB can bring down interest rates on loans by using financial tools, including cash reserve ratio and statutory liquidity ratio.
FNCCI has also suggested that the central bank bring down interest rates on loans. “Though the lockdown has been eased, the pandemic is still on and no firm is doing business.
As businesses will face tough time for a few more months, the central bank should not only bring down interest rates on loans, but should also ensure that there is sufficient liquidity in the market,” said Shekhar Golchha, senior vice-president of FNCCI.
The business community has also urged the central bank and the government to immediately mobilise subsidised loan facilities announced through the budget for the business community and ensure access of all businesses to such loans.
In the budget for the next fiscal year, the government had announced that loans worth Rs 150 billion would be provided to businesses at five per cent interest rate to help them tackle the challenges posed by the coronavirus crisis. “Businesses should get such subsidised loans 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 at the local level,” states CNI.