Home
B360 National

CBFIN urges all to cooperate on implementation of monetary policy

A A- A+

KATHMANDU: Confederation of Banks and Financial Institutions Nepal (CBFIN) has welcomed the monetary policy for the fiscal year 2022/23 unveiled by Nepal Rastra Bank (NRB). It has also urged all stakeholders to cooperate on the implementation of the policy. The central bank unveiled the monetary policy by analysing the targets set by the fiscal policy of 2022/23 and the expectations of the common people. According to CBFIN, the monetary policy has adopted timely policies to maintain economic and financial stability and to bring the declining economy back to rhythm in order to ease the current situation in which the country's important indicators of the economy are moving in a negative direction. CBFIN has said the policy has been issued with the objective of building a self-sufficient economy with special emphasis on increasing production and productivity remains positive overall. The umbrella organisation of commercial banks, development banks, and finance companies has said some of the measures adopted for the improvement of the current economy will be challenging. It has also expressed gratitude to the central bank for addressing some important issues presented by it in the monetary policy. CBFIN had made following suggestions:

To classify the loans flowing from the banks and financial institutions (BFIs) and maintain different interest rates for loans going to the productive sector and trade, the development of the productive sector
To flow loans to the productive sector
To prioritise export promotion
To coordinate the provision of exemptions this year itself for services and facilities based on evidence that the remittances have been brought into the country through formal channels
To make necessary amendments to the Foreign Investment and Foreign Credit Management Regulations, 2078
To review the existing arrangements related to remittances to widen the scope of remittances inflow into the country
To make arrangements to open a bank account mandatory for currency exchange for Nepalis going abroad

Similarly, it had also suggested continuing refinancing in productive sectors including agriculture, exports and others hit hard by Covid 19 pandemic, in order to increase access to credit for small, domestic, small and medium enterprises, to continue the system where bonds can be counted as deposits, to scrap the suspension of share trading when BFIs merge. CBFIN has expressed its hope that included suggestions to review credit centralisation, and to focus on increasing financial scope by increasing digital literacy will provide significant support for the recovery of the shrinking economy. The umbrella organisation stated that the negative impact on the Nepali economy due to various developments in the external sector has posed challenges to increasing investment in the productive sector, maintaining economic stability, keeping the price increase within the limit, keeping foreign currency reserves stable, maintaining the balance of payments, replacing the declining imports due to the weak production system. Further, it said, issues such as increase in bank rate, increase in limit of mandatory cash balance and legal liquidity ratio, arrangement to be revised (in case of reduction) in the margin to be kept for import, contraction in limit of lending, will cause more difficulties in liquidity management. It will be more challenging to build a self-sufficient economy. Moreover, CBFIN has assumed that there will be a contraction in the return of investments made in the banking and financial sector. CBFIN has expressed its hope that some important suggestions not included in the monetary policy will be addressed through future policies and directives. Meanwhile, it has urged all stakeholders to cooperate on the implementation of the monetary policy. READ ALSO: