Quarterly review of Monetary Policy: What are expectation of bankers?

KATHMANDU: The Nepal Rastra Bank (NRB) is gearing up for the quarterly review of the Monetary Policy for 2020-21.

NRB reviews the Monetary Policy every three months by assessing the monetary and economic situation and the state of implementation of the monetary policy. However, this year the central bank will review the Monetary Policy based on statistics of the four months due to COVID-19 circumstances, as per Gunakar Bhatta, spokesperson of NRB.

“We are collecting necessary statistics of the four months and majority of data have already been acquired,” informed Bhatta, adding that though quarterly review will focus on rectifying few provisions in the initial Monetary Policy.

Meanwhile, bankers have suggested different suggestions to be addressed though the quarterly review of the Monetary Policy. Here are their few suggestions:

  1. Liquidity Management: The biggest problem facing banks and financial institutions right now is liquidity. With the COVID-19 pandemic lasting long, business activities have slowed down and there is excessive liquidity in the banking sector due to lack of adequate demand for loan. Due to excessive liquidity, a huge sum of money has been accumulated in the banks. Due to this, the expenses of the banks are increasing while their income is decreasing. However, the central bank has not done much to manage the liquidity problem. Even though it raised about Rs 57 billion in internal debt during recently, this could not address the problem. Thus, bankers say that the NRB should make special arrangements for mobilizing liquidity.
  2. Arrangement to Charge for Banking Services: The Monetary Policy has barred banks and financial institutions from collecting various fees from customers for banking services. Bankers have urged NRB to revoke such provision and allow them to collect the expenses incurred in interbank ATM transactions, good for payment fee, balance certificate fee and other fees. Bhuwan Dahal, president of Nepal Bankers Association (NBA) said that banning banks from charging for such services would reduce the quality of service. “The quality of services will deteriorate if everything is made free. It is also learned that some banks even have stopped repairing ATMs after the inter-bank ATM service was made free,” he said.
  3. Prepayment Charge Determination: Another major demand of the banks is that the responsibility of determining the prepayment charge should be left to the banks. Bankers say that there was a risk of reinvestment in the advance repayment of the loan and demanded to be charged for that risk. The Monetary Policy stipulates that banks and financial institutions cannot charge more than 20 percent (prepayment charge) of the service charge.
Fiscal Nepal |
Tuesday November 24, 2020, 01:25:03 PM |

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