The Confederation of Nepal Industry and the Nepal Chamber of Commerce have said that the monetary policy for the fiscal year 2082/83 will increase economic activity. They say that the policy is positive and oriented towards financial facilitation.

The confederation has said that the announcement to revise the current capital loan guidance in the monetary policy based on the nature of industry business and the loan repayment-income cycle is positive.

The Confederation has emphasized that it should be amended so that working capital loans are required for manufacturing industries, construction sector and other businesses. The Confederation has positively taken the issue of reviewing the existing loan classification and loan loss system and adopting a policy of providing loans based on the customer's credit score.

It is said that loans of up to 30 million for industrial businesses around Hulaki Highway and Madhyapahari Lokmarg will be given at a 2 percent premium on the interest base rate and such loans will be counted as loans in the designated area for small and medium enterprises. The statement of the Confederation says, "This will help small and medium entrepreneurs who take loans of up to 30 million to face the existing difficult situation." The confederation says that the system of counting the loans of the poor will provide some relief to the banks that are under capital pressure for more investment. 

"We believe that the provision that banks and financial institutions can invest in debentures issued by established institutions to invest in infrastructure will partially help to improve the lack of investment in infrastructure," the statement states, "It is said that microfinance will review the restriction on distributing dividends (cash or bonus) of more than 15 percent." This will increase the amount of money (cash dividend) going to the investors and will help in the growth of demand, even if it is a little.''

monetary policy has absorbed the fact that the share of the private sector in the total fixed capital formation is decreasing. Due to contraction in market demand, private sector investment is also shrinking. The Confederation believes that the National Bank will issue directives/guidance to increase demand by improving consumer morale and encouraging private investment in capital formation.

The upper limit and lower limit of the interest rate corridor and the policy rate have been reduced from 6.5 to 6, from 3 percent to 2.75 and from 5 to 4.5 percent, respectively. "It seems that interest rates will not be allowed to go up and it will help to reduce more than the present and increase credit demand," said the statement of the confederation. We believe that it will also help in managing the structural liquidity in the banking system.

Banks and financial institutions are self-regulating and can give loans by giving high priority to the analysis of borrowers' projects, knowledge, skills and abilities. While the central bank is being accused of focusing on micro-management more than the specific purpose, the federation has said that it has positively taken the signal that the National Bank will pay attention to supervision by allowing the banks to self-regulate and provide loans at their own discretion. 

The Nepal Chamber of Commerce says that the monetary policy is positive and oriented towards financial facilitation. The statement issued by the Chamber states that the financial sector is expected to be operational through economic revival and easy credit disbursement.

The chamber says that if the credit flow to the private sector can be expanded by 12 percent, the current liquidity problem can be solved. The bank rate, which is the upper limit of the interest rate corridor, has been reduced from 6.5 percent to 6 percent and the policy rate has been reduced from 5 percent to 4.5 percent. It is believed that this will not allow liquidity management and interest rate increase in the market,'' the statement of the chamber states.

The chamber has welcomed the arrangement of the monetary policy to increase the loan limit from 20 million rupees to 30 million rupees for the construction or purchase of private housing. The Chamber concludes that the loan-to-value ratio can be maintained up to 80 percent for housing loans and up to 70 percent for others, which will help expand the real estate business and make the economy sustainable.

The Chamber has positively taken the measures taken for the rescheduling and restructuring of loans in the housing and real estate business and for the restoration of the construction sector. The chamber has considered the arrangement to modify the current capital loan guidelines based on the nature and income-payment cycle of sectors such as agriculture, small and cottage industry, education, health, communication, sports and media house.