Monetary Policy to help in business revival: private sector

 

By A Staff Reporter

Kathmandu, Aug 13

The private sector has welcomed the Monetary Policy of 2021/22 saying that it would make positive impacts on the post-COVID revival, entrepreneurship development and Small and Medium Enterprise (SME) promotion.

“It has given continuity to the facilitations announced in the monetary policy of 2020/21. It will make positive impact on economic and business revival,” said Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and Confederation of Nepalese Industries (CNI) in separate statements.

The business umbrella bodies said that the provision to add maximum 2 per cent premium on the base rate for up to the loan of Rs. 10 million will enhance the access of entrepreneur’s access to loan.

Scrapping of current CCD (Credit to Core Capital plus Deposit) ratio and requirement for the Banks and Financial Institutions (BFIs) to maintain maximum 90 per cent Credit Deposit ratio will increase liquidity in the market.

FNCCI suggested the central bank to manage liquidity as there were signs of pressure on it.

CNI stated that the announcement to freeze the interest of tourism sector enterprises will help in the revival of the business.

Both the business bodies welcomed the provision to offer 1 per cent higher interest rate if the remittance was deposited in the BFIs.

FNCCI said that promoting digital payment and minimising cash transaction was a welcome step while the revise in the charges on electronic payment and increase in the size of the payment will help in good governance. E-KYC will also facilitate common people.

“Increment in the loan to women entrepreneur will help in women in business. Likewise, promotion of loan to small holders and focal desk at the local bodies will make positive impact on increasing access to finance at the rural areas and entrepreneurship development,” said the FNCCI.

FNCCI has also welcomed the pledge to review the current provision to black the customers by the BFIs and increase of the surveillance listing period by 1 per cent.

Inclusion of project financing for start-ups and small enterprise is also welcomed by the private sector.

However, the ceiling on the margin lending at the time of spontaneous growth of the share market might discourage the market, said the FNCCI and CNI. Likewise, they said that the Monetary Policy failed to include the private sector suggestions to easing real estate and auto loan.

CNI said that the policy has failed to address the demands of the large industries/entrepreneurs. It also stated that maintaining 6.5 per cent inflation would be challenging to maintain during the expansion of economic activities. It demanded to revise the refinancing limit of Rs. 200 million or 20 per cent of the total loan.

“We have also suggested the central bank to provide loan to the SMEs and innovative business without collateral,” CNI said.

Published in The Rising Nepal daily on 14 August 2021.