Central bank mulls bringing down loan interest to single digit

KATHMANDU, JULY 1

The Nepal Rastra Bank (NRB) is formulating the Monetary Policy for 2020-21 with due focus on bringing down the interest rate and restructuring loans.

As per NRB sources, different measures are being introduced through the Monetary Policy to bring interest rate on loan to single digit, that is, around nine per cent. Similarly, the Monetary Policy is expected to restructure both interest on loan throughout the lockdown period and also restructure the loan itself.

“The Monetary Policy will primarily focus on addressing interest rate and loan with acknowledgement that businesses and the economy today has been hit hard by the COVID-19,” informed an NRB source seeking anonymity.

Though NRB has not finalised the date for unveiling the Monetary Policy for the upcoming fiscal year, it will be brought within this month.

Among other stakeholders, the business community is eagerly waiting for the Monetary Policy and wants the NRB to address their concerns citing that the budget could only partially address their recommendations.

“Along with restructuring loan and interest rate payment period for businesses that have been affected by the current crisis, the Monetary Policy will also facilitate in bringing down interest rate on loan, which is the major demand of the business community today,” said the NRB official. Along with this, the Monetary Policy will also introduce few measures to effectively implement the refinancing loan facility of the central bank.

As declared by the government earlier, the central bank is offering Rs 100 billion in refinancing facility to businesses affected by COVID-19 at five per cent interest rate to help them sustain and revive. “The Monetary Policy will also introduce measures to ensure financial stability in the country,” added the NRB source.

Meanwhile, Governor Maha Prasad Adhikari, a few days ago, had said that NRB would give priority to recommendations of the business community in the Monetary Policy. However, Adhikari had informed that prime focus would be given to borrowers of banks and financial institutions.

The business community has long been demanding that the government, especially NRB, to bring down interest rate to single digit and maintain stability in the interest rate. Similarly, businesses have also urged the central bank to manage refinancing loan facility for businesses at two per cent with maturity period of two years.

A version of this article appears in e-paper on July 2, 2020, of The Himalayan Times.

 

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