Kathmandu, July 25
The Confederation of Nepalese Industries (CNI) and Nepal
Chamber of Commerce (NCC) on Thursday appreciated the Monetary Policy of the
current fiscal year 2019/20 for creating the bases for high economic growth of
8.5 per cent and desired inflation.
"The Monetary Policy has tried to address the demand
of private sector about predictable interest rate and its stability and
announced some monetary instruments to contain it. Reduction in the bank rate
and refinancing rate, and provision to effectively implement the interest rate
corridor are the positive steps," both the organisations said.
Nepal Rastra Bank, the banking sectcor regulator, had
unveiled the Monetary Policy for the current fiscal on Wednesday.
CNI said that that policy had given enough attention
to managing liquidity in the market. Facility to mobilise deposits from the
Non-Resident Nepalis and institutional foreign depositors are welcome steps, it
said.
"The policy has enlarged the bases for the banks
and financial institutions (BFIs) for obtaining loan from foreign institutions.
The NRB has shown greater flexibility in the interest of foreign loan. These
provisions will help increase the liquidity and bring down the interest
rate," read the CNI statement.
However, it cautiously appreciated the mandatory
provision that asks the BFIs to issue long-term bonds.
Though it might help in creating financial stability
and reducing imbalance between assets and liabilities, it is yet to see to what
extent it would support in reducing the interest rate of business loan given
that the interest of such bonds is two digits, it said.
"We have estimated that the demand of private
sector loan will increase this year. Therefore, to maintain financial stability
and create enough liquidity in the market, the NRB should implement the
liquidity indicators of the Basel III," read the statement.
CNI has appreciated the incentives for merger and
acquisition. But it said that concession for high credit rating industries in
credit facility and merchandising to the third country and provision to import
industrial goods without the Letter of Credit were not addressed by the policy.
But NCC said that the policy did not have plausible
instruments to contain inflation and maintain liquidity.
"It has partially addressed the issues of
business loan facility and growing interest rate. Without addressing these two,
rapid economic growth might not take the desired momentum," it said.
NCC said that it had proposed 3.5 per cent spread rate
to the central bank but the Monetary Policy had put it at 4.4 per cent.
Published in The Rising Nepal daily on 26 July 2019. 
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