KATHMANDU: The Confederation of Nepalese Industries (CNI) and Nepal Chamber of Commerce (NCC) on Thursday appreciated the Monetary Policy of the current fiscal year 2019/20 for creating the bases for high economic growth of 8.5 per cent and desired inflation.
“The Monetary Policy has tried to address the demand of private sector about predictable interest rate and its stability and announced some monetary instruments to contain it. Reduction in the bank rate and refinancing rate, and provision to effectively implement the interest rate corridor are the positive steps,” both the organisations said.
Nepal Rastra Bank, the banking sectcor regulator, had unveiled the Monetary Policy for the current fiscal on Wednesday.
CNI said that that policy had given enough attention to managing liquidity in the market. Facility to mobilise deposits from the Non-Resident Nepalis and institutional foreign depositors are welcome steps, it said.
“The policy has enlarged the bases for the banks and financial institutions (BFIs) for obtaining loan from foreign institutions. The NRB has shown greater flexibility in the interest of foreign loan. These provisions will help increase the liquidity and bring down the interest rate,” read the CNI statement.
However, it cautiously appreciated the mandatory provision that asks the BFIs to issue long-term bonds.
Though it might help in creating financial stability and reducing imbalance between assets and liabilities, it is yet to see to what extent it would support in reducing the interest rate of business loan given that the interest of such bonds is two digits, it said.
“We have estimated that the demand of private sector loan will increase this year. Therefore, to maintain financial stability and create enough liquidity in the market, the NRB should implement the liquidity indicators of the Basel III,” read the statement.
CNI has appreciated the incentives for merger and acquisition. But it said that concession for high credit rating industries in credit facility and merchandising to the third country and provision to import industrial goods without the Letter of Credit were not addressed by the policy.
But NCC said that the policy did not have plausible instruments to contain inflation and maintain liquidity.
“It has partially addressed the issues of business loan facility and growing interest rate. Without addressing these two, rapid economic growth might not take the desired momentum,” it said.
NCC said that it had proposed 3.5 per cent spread rate to the central bank but the Monetary Policy had put it at 4.4 per cent.
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