KATHMANDU: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has expressed its concern over the increase in interest rates implemented by banks and financial institutions (BFIs) from September 17.
Issuing a press statement on Wednesday, FNCCI has drawn the attention of the government, central bank and BFIs to the fact that an increase in interest rate on loans will affect the entrepreneurs who have been facing various problems owing to Covid 19 pandemic and imbalance in external as well as the financial sector.
The FNCCI said that due to rising costs, micro, small and medium enterprises (MSMEs) may have to shut down their businesses as the prices of manufactured goods have gone up, and the livelihood of the people is also becoming difficult.
FNCCI has argued that the decision of BFIs to increase the interest rate will further increase the inflation rate which has reached above 8%. The government’s revenue collection has also decreased 20%, the FNCCI stated.
In the current situation, all sectors of the economy should help each other. The federation has also appreciated the support received from the banking sector, especially during the first nationwide lockdown imposed to stem Covid 19 pandemic. However, due to their recent decision to increase interest rates, the existing business will be at risk and new investment will be discouraged. It also reminded the BFIs that the deposits did not increase by merely increasing the interest rate in the past.
The FNCCI said there may be a crisis in the economy when the interest burden of loans increases in the industrial business sector which is going through a difficult situation.
Meanwhile, the federation has urged all stakeholders to immediately scrap the decision to increase the interest rate which will have a negative impact on the economy.