Interest rate in investment won’t increase soon: NRB Governor Adhikari

development bond, NRB

KATHMANDU: Governor of the Nepal Rastra Bank, Maha Prasad Adhikari, has assured the private sector that interest rate on investment will not increase immediately.

In a meeting with a delegation of the Confederation of Nepalese Industries (CNI) on the eve of the first quarterly review of the monetary policy for the current fiscal year 2021/22, he said that policy arrangements would be made to keep the interest rate stable in order to promote industrialisation.

Governor Adhikari said that the NRB had always been vigilant in keeping the interest rates of banks and financial institutions (BFIs) within the required limits.

He also mentioned that the NRB had issued new directives to check the unhealthy competition in the market. “The NRB expects that the interest rate of investment will be stable from this step”, he said.

President of the CNI Vishnu Kumar Agrawal said that the liquidity pressure in the market was increasing and banks were raising interest rates on deposits and this would further increase interest rates on loans in the coming days.

The CNI has also urged the NRB to allow the banks to calculate the deposits of the local governments in the BFIs in the loan-to-deposit ratio for a certain period of time to reduce the liquidity pressure.

Through the current monetary policy, the NRB has introduced a rule that commercial banks should maintain credit-deposit (CD) ratio of 90 percent when disbursing loans. Since the liquidity is less than estimated, the rule should be changed to 95 percent CD ratio by mid-January and 90 per cent by mid-July, CNI urged the central bank.

Chairman of the CNI’s Banks and Financial Institutions Committee, Anil Raj Bhattarai, urged the NRB to calculate the deposits and loans in foreign currency separately in order to add some liquidity to the market.

Fiscal Nepal |
Sunday October 24, 2021, 12:04:48 PM |

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