Governor directs banks to make investment cautiously

Kathmandu, Dec. 29

Governor of the Nepal Rastra Bank (NRA) Maha Prasad Adhikari has directed the banks and financial institutions (BFIs) to apply caution while mobilising credit warning that the inflated deposits may be lent to the risky areas.

Credit is growing in recent months after the months-long lockdown and business closure but you must be cautious in mobilising it as there are risks of investing in risky sectors due to the growing competition, he said while speaking at the annual function of Nepal Bankers’ Association (NBA).

The large funds accumulated in the BFIs has pressurised them to invest it aggressively.

The governor suggested to channelise the investment to the productive sector.

“Private sector lending is gradually increasing. The credit demand was not encouraging in the beginning of the current fiscal year but it has shown good signs now,” said Adhikari.

Class ‘A’ commercial banks alone have mobilised Rs. 4200 billion in deposits and Rs. 3200 billion in loans.

He also said that the central bank had given priority to the electronic payment system.

“We are replacing the traditional payment system with the modern and technological one. Financial infrastructure is already created. So all stakeholders should give priority to the electronic payments,” he said.

NRB has launched a QR code payment campaign and recently implemented it at the Naxal Vegetable Market in collaboration with Sanima Bank. According to the NRB, QR-based payment will reduce the dependency on the imported technology and cards. It’s a safe method in case of COVID-19 like pandemic as well.

Governor Adhikari said that the central bank must use instruments to control wrongdoing in the markets and facilitate the banking industry. However, we are not interested in the micro-management of any bank and financial institutions (BFIs), he said.

Earlier in the programme, Pawan Kumar Golyan, Chairman of Confederation of Bank and Financial Institutions of Nepal (CBFIN), had said that NRB’s micro-management wouldn’t have good impacts so the central bank should work it in coordination with the NBA.

He also said that there were multiple changes in the Monetary Policy of 2020/21 in the past five months which had created confusion among the bankers and customers.

On the occasion, NBA facilitated former Governor of the NRB Satyendra Pyara Shrestha.

He said that saving and investment were key to the growth of the economy and development of the country.

Bhuvan Dahal, President of the NBA, said that the technology-based banking had been expanded to rural and remote areas as well.

Commercial bank’s capital fund is above the NRB-set limit so the depositors must not be worried about the safety of their deposit, said Dahal.

Chief Executive Officer of Agricultural Development Bank Limited Anil Upadhyaya has been elected unanimously as the Vice-president of the association. Likewise, Santosh Koirala of Machhapuchchhre Bank Limited and Deepak Kumar De of Nepal SBI Bank Limited are elected as the members.

Published in The Rising Nepal daily on 30 December 2020.