Kathmandu, Nov. 29
The Federation of Nepalese Chambers of Commerce and Industry
(FNCCI) has termed the 'working capital loan' as the main obstacles to the
business and private sector growth and said that it would not be possible to continue
business if the present economic challenges persisted.
Organising a press meet a couple of days after the Nepal
Rastra Bank (NRB) indicated its reluctance for immediate revisal in the
Guidelines on Working Capital Loan, 2022 issued in August, the FNCCI on Tuesday
warned of additional programmes to protest the implementation of it and
exorbitant bank interest rate.
It said that no one should forget that the economy was
facing multidimensional challenges because the activities of the private sector
that plays a vital role in creating wealth in the nation were contracted.
"Since there is no environment to run the business, the
private sector is forced to agitate. This is not our choice, it has become an
obligation," said president of the FNCCI, Shekhar Golchha while warning that
if the government failed to announce programmes to support the private sector
and reform the economy, the private sector would announce additional programmes
of protest.
"We express our solidarity with all the protests and
agitation programmes organised by the district chambers," he said. “However,
we want the solution to the present challenges through dialogue with the
concerned stakeholders including the NRB and the government.”
Golchha demanded a halt to the implementation of the
guidelines for at least two years from now.
The FNCCI, along with other business bodies like the
Confederation of Nepalese Industries (CNI) and Nepal Chamber of Commerce (NCC),
and dozens of commodity associations and district chambers, has been voicing
its reservations over the guidelines that put a cap of 25 per cent on the
working capital loan. This loan is a facility for businesses and industries to
finance their daily operations and is not used to buy long-term assets.
Stating that the FNCCI has submitted a list of suggestions
to make reforms in the provisions of the guidelines that could adversely impact
the private sector businesses, Golchha said that, currently, the economy has
been demanding promotional reforms not punitive measures. "We are hopeful
that the central bank will be positive to our demands," he stated.
But the central bank has been claiming that the businesses
had been misusing the working capital loan. So, it did not amend the provision
despite a strong pressure from the private sector for the same. However, at a
virtual programme organised to announce the review of the Monetary Policy of
2022/23, spokesperson for the central bank, Dr. Gunakar Bhatta, said that the
NRB would address the demands as per the suggestions received from the
stakeholders.
As per the guidelines, a firm with an estimated annual
transaction up to Rs. 20 million will get loan up to 20 per cent of its annual
turnover. However, it can obtain up to 40 per cent of annual turnover amount in
special cases.
Likewise, the interest rate was the second crucial factor to
cause problems to the economy, according to the FNCCI.
Welcoming the central bank's move to reduce the average
spread rate of the banks and financial institutions by 0.4 per cent and saying
that it may cease the interest rates from climbing up further, the business
body demanded that the procedure to implement the provision should be
formulated and implemented immediately.
Likewise, Golchha said that without decreasing the base
rate, chances of reducing the interest rates are bleak. "Therefore, the
government and the central bank should immediately work to find ways to
increase liquidity in the market and tame the interest rates," he said.
The FNCCI wants the government to expedite the development
work and increase the money-flow in the market, attract more foreign direct
investment, initiate process to get the country rating, and implement the
provision to provide loan to the manufacturing industry at lower rates than the
trading companies – a provision which was announced through the budget of the
current Fiscal Year 2022/23.
Chandra Prasad
Dhakal, Senior Vice-President of the FNCCI, said that the present crisis was not
the offshoot of a businessman being a banker.
"A chairman or an official of a bank wouldn't be able
to twist the policies or make whimsical decision to trouble businesses or
borrowers," he said.
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