Business bodies seek cut in bank interest rate

Kathmandu, July 7

Three representative organisations of the private sector - Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Nepal Chamber of Commerce (NCC), and the Confederation of Nepalese Industries (CNI) – have jointly urged the Nepal Rastra Bank (NRB) to bring down the interest rates on loans and help create an environment for business esto flourish.

Speaking at a programme jointly organised by the three organisations in the Capital on Thursday, the private sector representatives suggested lowering the interest rates and facilitating businesses.

Chandra Prasad Dhakal, President of the FNCCI, said that a large amount of deposits at the banks and financial institutions (BFIs) have been converted to fix deposit which has sent the interest rates up.

The central bank should look for the options to adjust the interest rates in fix deposits or having multiple raters, he suggested. .

According to him, there should be a provision of a fund to provide refinancing facility to the industries of the priority sector including manufacturing, small and medium industry, export industries, tourism infrastructure, cable cars, and women entrepreneurs.

Dhakal also requested the Nepal Rastra Bank to provide special concession for manufacturing industries on interest rates. He also asked for the revision of the Rs. 120 million ceiling on share margin lending.

According to him, the base rate should be brought down. Now Rs. 400 billion is in the financial system, but the BFIs have been facing challenges to sell that money due to high base rate.

Dhakal stated that there were some mistakes from the businesspersons as well as they tried to channelise the concessional loans to real estate, stock market and luxury purchases.

Businesses have become a kind of suffocation due to high-interest rates and decreasing demand.

Rajendra Malla, President of NCC, emphasised on the harmonisation between the fiscal and monetary policy.

"We want a flexible monetary policy to raise the confidence of the private sector entrepreneurs and expand the business activities. High-interest rate has become one of the major obstacles in enterprise development and is causing more damage to the economic activities," he said.

Similarly, Ananda Bagaria, Chairperson of the Bank, Finance and Insurance Committee of the FNCCI, said that the central bank and the government should devise better ways to face the current economic challenges.

Governor of the Nepal Rastra Bank (NRB), Maha Prasad Adhikari, said that the central bank was putting its efforts to facilitate business and industries affected by the coronavirus pandemic.

President of the CNI, Rajesh Kumar Agrawal, said that the private sector organisations have come together so that the business and investment climate in Nepal could be improved.

Published in The Rising Nepal daily on 8 July 2023.