Officials of the Confederation of Nepalese Industries (CNI) — an umbrella organization of domestic service and manufacturing industries — argued that reduction in CRR for banks and financial institutions will help to ease the ongoing credit crunch in the financial market of the country. Providing its suggestions to NRB on the upcoming Monetary Policy, CNI said that it wants NRB to slash the CRR for all the banks and financial institutions by one percent.
CRR refers to the minimum percentage of the total deposit of customers which banks and financial institutions have to hold as reserve either in cash or as deposit with the central bank. Currently, the central bank has fixed CRR at six per cent for commercial banks, five per cent for development banks and four per cent for finance companies.
CNI also proposed for the funds to be mobilised through the financial system if the government has treasury surplus of above 10 per cent of the budget to prevent credit crunch in the domestic market.
“Nepal is witnessing economic growth while a majority of the big economies across the world are facing problems. This is an opportunity for Nepal to grow and this growth can be ensured if small and medium enterprises are welcomed in the capital market,”said Hari Bhakta Sharma, president of CNI, said.
Citing that the unpredictability of financial cost has been a major setback for industrial growth in Nepal, CNI said that NRB should also introduce provisions in the Monetary Policy that ensure stability in the interest rate for loans that banks
Industrialists also said that NRB should take initiatives and promote cashless transaction in every sector to transform the domestic economy into cashless economy.
Informing that structural reforms along with friendly Monetary Policy are required to sustain growth, Nara Bahadur Thapa, executive director of NRB said, “A coordinated effort is required to improve the financial technology (FinTech) in the country to bring down cost of operation.”