Monetary Policy 2020/21
Kathmandu, Jul 18
The central bank has drawn unprecedented
appreciation for the Monetary Policy 2020/21 for its efforts to address the
needs of the businesses during the COVID-19 crisis, provide relief to citizens
and revive the economy.
Business organisations like the Federation
of Nepalese Chambers of Commerce and Industry, Confederation of Nepalese
Industries, Nepal Chamber of Commerce and businesses of various scales have
welcomed the policy and expressed hope that it would support in rehabilitating
the industry and bringing the economy back on track of high growth.
All stakeholders said that rescheduling and
restructuring of loan and extension of loan repayment period for the severely
hit businesses like the tourism sector were timely and effective measures to
help them in enduring the shocks inflicted by the pandemic.
The policy is announced in critical time
with a special purpose to revive and rehabilitate the businesses, they said.
The pandemic caused a severe repercussions on
the economy sending about 70 per cent businesses and industries off the
operation while bringing the tourism and other service sectors like transportation,
aviation and education to a complete halt. According to primary estimation,
about 1.8 million jobs were affected and hundreds of thousands will be
permanently lost.
The private sector is desperately seeking
financial and other supports to save and revive the businesses. The Monetary
Policy brought out in such a situation has tried to soothe the bruises in the
economy and business, said the experts.
The FNCCI officially welcomed the policy
announced by the Governor of the Nepal Rastra Bank Maha Prasad Adhikari the
other day through a Nepal Television broadcast.
"Extension of the loan repayment
period of the due of mid-July 2020 for the least affected, moderately and
severely affected businesses to mid-January 2021, mid-April 2021 and mid-July
2021 is a welcome step," said the business body in a statement on
Saturday.
It maintained that the increased credit to
core-capital plus deposit (CCD) ratio would help in increasing liquidity in the
system while the provision to allow the banks and financial institutions (BFIs)
to mobilise 20 per cent additional loan in the existing capital loan would
provide relief to the private sector.
The FNCCI also appreciated the mandatory
lending provisions for the agriculture and energy sectors and investment by the
BFIs in the micro, small and medium scale industries.
Former Governor of the Nepal Rastra Bank
Deependra Bahadur Kshetry appreciated the policy and said that all the
expectations of the private sector except automobile business were met by it.
"The central bank should immediately
form a task-force to implement the monetary policy. It is announced in a good
spirit but poor implementation can destroy the good intentions of the
NRB," he said in different interactions on Saturday.
But he said that although steps taken in
terms of loan rescheduling and restructuring for short-term, medium-term and
long-term were good, it was not clear who would evaluate the loans.
Kshetry suggested that every bank must
enable their branches to expand the concessional loans and other investment
facilities, and strong measures should be devised for the same.
He recommended a periodic policy dialogue
among the stakeholders to follow up the policy implementation and resolve the
problems.
Coordinator of Banking Committee at the
Confederation of Nepalese Industries (CNI) Anal Raj Bhattarai lauded the policy
saying that it included all the instruments needed and could be mobilised to
restore the economy and business sectors.
"It has planned to put efforts to
rehabilitate the businesses. CNI welcomes the monetary policy," he said.
Chairperson of the Banking Committee at the
FNCCI Saurabh Jyoti also said that the policy included most of the
recommendations made by the private sector and was likely to help support the
businesses in crisis.
"The industries that remained shut for
three months need liquidity which I think will be addressed by the adjusted CCD
rates and other provisions of refinancing," he said.
Vice-President of the Federation of the
FNCCI Chandra Prasad Dhakal appreciated the policy for its efforts to address
the problems in every business sector from services to manufacturing. He said
that the policy should be implemented in a way that the small and medium scale
enterprises in the districts could be benefitted.
Vice-President of the Nepal Chamber of
Commerce Kamlesh Agrawal echoed the same voice and said, "I urge the NRB
to simplify the refinancing provisions in order to provide the much needed
boost to the economy. Complex process will leave the SMEs helpless and will not
help in business revival."
He also said that the central bank missed setting
the lending rates and left it to the decision of the BFIs.
However, the FNCCI and other experts said
that the monetary policy failed to meet the expectations of the private sector
to credit recovery policy to help the entrepreneurs raise their money stuck in
the market and exit from the business. Jyoti said that about 20 per cent
businesses were estimated to have gone bankrupt and were seeking exit from the
market. "They need a better exit policy including the credit recovery
policy," he maintained.
President of the Confederation of Bank and
Financial Institutions Nepal Pawan Kumar Golyan said that more clarity was
needed in terms of the instruments like the special-purpose vehicle announced
to support the severely affected areas like tourism.
Loan to the highly affected areas can be
restructured through the instruments like private equity, venture capital, debt
equity conversion and special purpose vehicle if the restructuring and
rescheduling are not enough to rehabilitate the businesses.
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