FNCCI calls for monetary policy to boost private sector, revitalise economy

Kathmandu, July 8

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has emphasised the need for policy reforms to address the prevailing economic slowdown, risks in the financial sector, and the large share of the informal economy.

The aim is to revitalise the recovering economy, boost private sector confidence, and address risks related to anti-money laundering compliance, it said in its recommendations to Nepal Rastra Bank (NRB) for the Monetary Policy for Fiscal Year 2025/26.

Stating that poor governance and lack of infrastructure have hindered the effectiveness of policy reforms, the FNCCI called for a monetary strategy targeted towards infrastructure development.

A FNCCI delegation led by Acting President Anjan Shrestha, submitted these suggestions to NRB Governor Biswo Nath Poudel on Tuesday.

The federation urged the inclusion of concrete programmes to implement the credit restructuring and rescheduling provisions outlined in the budget for the FY 2025/26, to ensure the facility is accessible to small, medium, and large businesses alike. It further recommended clear and effective implementation of additional working capital provisions and interest penalties waivers.

FNCCI also stressed the need to facilitate easy access to working capital loans for productive sectors, tourism, construction, and housing development companies. It recommended that banks and borrowers be given the authority to decide on working capital loans based on nature of business.

Likewise, citing the decline of the industrial sector’s share in GDP to 12.4 per cent, it proposed that interest rates for industrial loans should be 1–2 per cent lower than that for trade.

Regarding Nepal's upcoming graduation from LDC status in 2026, FNCCI proposed concessional financing policies to sustain the competitiveness of micro, cottage, small, and women-led export-oriented enterprises. It also suggested linking women entrepreneurship loans to production and managing interest subsidies, as well as capping premium rates at 2 per cent for loans up to Rs. 50 million.

Furthermore, FNCCI called for flexibility in the watchlist provisions, and to attract Gen Z into entrepreneurship, it recommended facilitating business registration via the Nagarik App and offering project loans of up to Rs. 10 million. It also urged the implementation of FNCCI’s feasibility study in this regard.

Similarly, it proposed concessional loans for families of migrant workers who send remittances formally while still abroad. It recommended revising the current targeted lending policy to prioritise productive industries, tourism, and infrastructure, and called for the establishment of an asset management company in response to the growing volume of non-performing assets in banks and financial institutions.

Highlighting the prohibition on domestic remittances via remittance companies, FNCCI noted that this policy adversely affects low-income groups, students, informal workers, and those without access to bank accounts or smartphones, especially in remote areas. It recommended allowing internal transfers of up to Rs. 100,000 through remittance companies based on valid ID, equivalent to international cash payouts.

Additional recommendations include increasing the housing loan limit from Rs. 20 million to Rs. 30 million, linking KYC requirements to the National Identity Card to enable electronic access by relevant agencies, and implementing free interoperability for QR payments.

Regarding foreign investments, FNCCI suggested effective implementation of the budget provision allowing Nepali businesses to open sales branches or processing plants abroad and to invest up to 25 per cent of total exports. It also proposed that the monetary policy clarify the provision allowing Nepali citizens to receive sweat equity shares in return for providing technology or specialised services to foreign companies.

Published in The Rising Nepal daily on 9 July 2025.