Saturday, December 30, 2023

Healthy growth of banking sector required for growth of other sectors

 Kathmandu, Dec. 29

Vice-Chairman of the National Planning Commission (NPC) Dr. Min Bahadur Shrestha has said that a strong banking industry can contribute to the development and growth of the other business sectors.

Speaking at the third annual general meeting of the Confederation of Banks and Financial Institutions of Nepal (CBFIN) in Kathmandu on Friday, he said, "The government is aware of this fact and is paying attention to the healthy growth of the banking sector."

"So far, about Rs. 6 trillion deposits are in the banking sector, and about Rs. 5 trillion is being invested. That investment could not increase production and employment as expected," said Dr. Shrestha, "If this sector contributes to the increment of production and employment, it will also be the first beneficiary of that development."

According to him, among the various sectors of the country, the banking and financial sector is the sector running with international standards.

Dr. Shrestha said that the production in the country decreased and the ever-increasing imports have aggravated the challenges in the economy. "There is a situation that when we try to resolve the problem in one sector, a problem props up in another sector."

Member of the NPC Dr. Ramesh Chandra Paudel said that unless the manufacturing sector was freed from financial problems, production and productivity would not increase and the youth would not get employment. For that, he said, an environment should be created in which up to 20 per cent of the loan amount could be invested in the manufacturing sector.

He said that the interest rates on loans given to the manufacturing sector should be less than that of the service sector.

President of CBFIN Pawan Kumar Golyan urged the NPC to give priority to the financial sector and the private sector in the 16th Plan that would be implemented for the next five years from the Fiscal Year 2024/25. He said that banks and financial institutions are ready to contribute to fulfilling the quantitative targets taken by the NPC.

He also urged the Commission to take the bank and financial sector together in the upliftment and growth of the industry, energy and service sectors along with the agricultural sector to lead the country on the path of development.

Golyan suggested increasing the capital expenditure to improve the overall economy. The CBFIN suggested that the policy arrangements for using domestic products should be implemented compulsorily, preferential interest rates should be maintained for productive, exporting and employment sectors, innovation, development of self-entrepreneurship and improvement and upgrading of domestic, small and medium entrepreneurs and industries should be prioritised.

Addressing the programme, Rajendra Malla, President of the Nepal Chamber of Commerce, said that the economic indicators have turned negative from all sides and single-digit interest rates should be maintained to keep the economy running.

He said that the economy will not be accelerated as long as there is a double-digit interest rate. "The government's economic policy should match the five-year plan. Without that, the economic sector will not be viable," said Malla.

Likewise, Vice-President of the Confederation of Nepalese Industries (CNI) Amit More said that the rule of law should be established in the country, and the arrears would be paid when evidence was found in the dispute with the Nepal Electricity Authority regarding the payments of the dues for dedicated electricity supplied several years ago.

 Published in The Rising Nepal daily on 29 December 2023.  

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