We use Google Cloud Translation Services. Google requires we provide the following disclaimer relating to use of this service:
This service may contain translations powered by Google. Google disclaims all warranties related to the translations, expressed or implied, including any warranties of accuracy, reliability, and any implied warranties of merchantability, fitness for a particular purpose, and noninfringement.
In order to make the economy more viable, the Confederation of Nepal Industry has suggested 15 points for the monetary policy of the next financial year.
The confederation has given this suggestion to bring monetary policy focusing on the revival of the economy while helping to achieve the target set by the budget.
In the suggestion handed over by the President of the Confederation Rajesh Kumar Agarwal to the Governor of Nepal Rastra Bank, Vishwanath Poudel, it is mentioned that monetary policy should be introduced focusing on the revival of the economy while helping to achieve the goals set by the budget. Chairman Agarwal emphasized that the upcoming monetary policy should encourage the private sector to invest, increase market confidence and help revive the economy.
"Banks and financial institutions are required to make almost half (45 percent) of total lending to priority areas, which is higher than in neighboring India and perhaps the highest in the world," the federation said, "This has constrained banks' investment even now." Even in the long term, it will not play a stimulating role in the expansion of the economy, so the current credit limit for such directed investment needs to be reduced by the National Bank from the upcoming monetary policy.
The Confederation says that the policy rate, which is important to meet the goal of credit expansion while keeping the financial market under the expected discipline, is not being effective as per the Central Bank's thinking. The Confederation suggests that it is necessary to make the policy rate effective so that the interest rate can be disciplined according to the purpose of the National Bank.
Rastra Bank is currently required to maintain statutory liquidity ratio (SLR) of 12 percent in case of commercial banks and 10 percent in case of 'B' and 'C' financial institutions.
Although it is not necessary to reduce it immediately, after the economic activity starts to return to the rhythm, as there is a possibility of lack of liquidity in the market, the confederation has suggested to reduce it according to the need (open/flexible).
The Confederation has asked to remove the existing maximum and minimum interest rate difference of 5 percent in term and savings deposits, and to remove the provision that when reviewing the interest rate, it cannot be reduced or increased by more than 10 percent from the rate published in the previous month and more than once. "Because banks and financial institutions are not in a position to give additional or additional loans due to the set criteria/limits of the capital adequacy ratio, this provision is not necessary in the current context, even though banks are not currently seen as facilitating unhealthy banking practices due to extreme fluctuations in interest rates," the suggestion states, "Other measures can be adopted to discourage unhealthy competition in interest rates." "In order to maintain regulatory professionalism and for objective and dynamic policy practice according to the specific needs of the economy, the practice of making the board of directors members of the central bank experts is worldwide," the suggestion states, "Similarly, the members appointed as directors in the board of directors of Nepal Rastra Bank should be appointed on the basis of expertise and not on the basis of access."
