Gopal Kafle, deputy governor of Nepal Rastra Bank (NRB), talked to SANJAYA DHAKAL on the banking crisis and the response from the central bank. Excerpts:
How is the situation?
We have taken measures to ease refinancing to the BFIs that are genuinely troubled so that they can overcome the short-term liquidity crunch. We have also decided that big institutional depositors will not withdraw their matured deposits from the BFIs for the time being.
How do you explain the series of crises in a number of BFIs?
There are two sorts of crises. One is purely due to bad corporate governance and even outright fraud. Another is due to short term liquidity crunch. Take for example the case of Vibor development bank, whose financial state is still sound. After we became convinced about its situation and knew how its crisis could affect financial system, we decided to back it and bail it out.
What do you want to say to common depositors?
NRB is closely monitoring the situation. We are acting promptly where needed. Therefore, the depositors do not need to worry.
Do you think NRB’s sudden measures to limit BFI’s investment in real estate could have triggered this crisis?
No. In fact, we have saved the system from major crisis. However, we have been hearing about the complaints that the limits placed on real estate could be responsible for this crisis. And we are open to suggestions. We have already relaxed investment on housing sector. If there is a need, we are ready to move towards improving policies.