Home / Business / FNCCI seeks central bank’s intervention

FNCCI seeks central bank’s intervention

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) — the largest private sector umbrella body of the country — has sought Nepal Rastra Bank (NRB)’s intervention to bring down the lending rates stating that the industries and business sector have been adversely affected due to high and unpredictable lending rates since last one-and-a-half years.

Bhawani Rana, president of FNCCI, said that though the Monetary Policy of ongoing fiscal has tried to address the challenges faced by the industries and business sector, banks and financial institutions (BFIs) are not lowering their interest rates due to the passive role of the central bank. Stating that while political stability, an end to power cuts and the establishment of cordial labor-employer relations have encouraged the industries and businesses to inject additional investment, high lending rates are the major deterrents. She sought execution of the Monetary Policy as per its spirit, that is, to bring down the deposit and lending rates to an ideal level and stabilize the rates.

“The business community has been drawing the attention of the Ministry of Finance and the central bank that high lending rates have adversely affected the investment climate and that the industries and businesses across the country are going through a turbulent time,” said Rana addressing the interaction programme organized here today. “The government has envisioned high growth rate and the central bank’s Monetary Policy has aimed to support the growth target of the government, but it has ignored the challenges facing the private sector in moving forward.”

Industrialists claim to be facing the worst time as the lending rates have nearly doubled in the last one-and-a-half year, making their businesses unviable.

Domestic industries have been hit hard due to soaring lending rates, according to Umesh Lal Shrestha, vice president of FNCCI. “While turning a blind eye to how traders pass on their costs to consumers, the government has been strictly regulating and monitoring the prices fixed by the domestic manufacturers on their products. In this situation, how can domestic industries survive?”

Anjan Shakya, the executive member of the FNCCI, urged for a provision of floating and fixed lending rate based on the nature of industries. “For example, the returns from a hydropower project is fixed as it is based on the power purchase agreement rate. Hence, lending rates should be fixed for such projects,” he reiterated.

The private sector umbrella body said that business community is only focused on trading (import), which gives returns in a very short term compared to other businesses due to unpredictable and high lending rates.

Addressing the business community, Governor of Nepal Rastra Bank Chiranjibi Nepal said that the central bank has introduced various measures through the Monetary Policy to lower the lending rates and stabilize it so that the private sector can plan their investment and projects in a stable and predictable interest rate regime.

Stating that the high lending rates of the BFIs are the result of haphazard credit flow from the banks, Governor Nepal said that to prevent such situations, the central bank has asked the BFIs to submit their annual deposit and credit mobilization plans and has been supervising them on the basis of their plans.

He further stated that the Monetary Policy has brought down the financial intermediation cost of the BFIs so that the borrowers can avail loans at reasonable rates.


This article originally published on The HimalayanThimes

Check Also

Promotion of Accessible Tourism Helps Boost Economy

Promotion of Accessible Tourism Helps Boost Economy

Promotion of Accessible Tourism Helps Boost Economy: Report Nepalayatimes Kathmandu – A study has argued …

Leave a Reply

Your email address will not be published. Required fields are marked *