KATHMANDU, July 25: The Nepal Rastra Bank on Wednesday introduced its monetary policy for the fiscal year 2019/20. The monetary policy has focused on addressing the liquidity problem in the banking sector and stabilizing fluctuation in interest rate.

The monetary policy includes measures to ease the existing shortage of lendable funds at banks and financial institutions and lower interest rates borrowing costs for business.

The NRB has lowered the general refinance rate to three percent from four percent in order to make loans cheaper for priority sectors such as tourism, manufacturing and energy.

The NRB has also diversified the sources for bank and financial institutions to get funds from abroad allowing them to get funds in foreign currency from pension funds, hedge funds and sources abroad.

The banks and financial institutions will also be allowed to collect deposits on foreign currency from institutions, foreign depositors and non-residents Nepalis, and 100 percent of such deposits with a maturity period of two years can be distributed as loans.

The commercial banks will require issuing 25 percent of their paid-up capital in debentures by mid-July 2020.

Here is what the banking experts have said about the monetary policy. Watch video:

KATHMANDU, April 27: The Nepal Rastra Bank (NRB) has said that supply of money is normal even in the context of expanding economic activities.

Addressing a function organized on the occasion of the 63rd anniversary of the central bank in the capital on Friday, Governor Dr Chiranjibi Nepal said that money supply was made accessible during the time of high demand as well.

Governor Dr Nepal said that progress in power supply and reconstruction works, and the government’s commitment to development and prosperity have created investment-friendly environment in the country.

Likewise, Dr Nepal shared that a total of 158 banks and financial institutions were merged to become 40 institutions till the first nine months of the current fiscal year after enforcement of the BFIs Merger and Acquisition Bylaws.

Of the 753 local levels, the commercial banks have reached out to only 394 local levels so far and the branches of the banks would be opened in the remaining other local levels till the end of the current fiscal year, according to the governor. RSS

KATHMANDU, Oct 24: Nepal Rastra Bank (NRB), the central bank of Nepal, said that it was making utmost efforts to retrieve the money amounting to over Rs 400 million transferred to various banks abroad by hackers using SWIFT from NIC Asia Bank.

Some unidentified hackers reportedly broke into the Society for Worldwide Interbank Telecommunication (SWIFT), an international payment network, at the NIC Asia Bank in Kathmandu, and had siphoned off the amount from there during the Tihar holidays.

Hackers were learnt to have transferred the amount to eight banks in six countries.

According to the Joint-Spokesperson at the NRB, Rajendra Pandit, NRB has already sought help of the domestic banks to make efforts to retrieve the amount transferred abroad.

Also, it has sought help of banks in those six countries from where hackers have requested the transfer.

NIC Asia Bank too has been stepping up its effort towards this end.

A total of 11,000 banking and financial institutions across 200 countries are said to be using SWIFT system.

Joint-Spokesperson Pandit also reminded that the NRB had instructed all the banks and financial institutions to pay special attention to the usage of IT in banking not only to make banking easier, convenient but also to curb the cyber attack and illegal transferring in the banking.

NRB on Monday had summoned the Chief of the IT department of all the banks in the capital to discuss how to secure the internal system of banking.

MAHENDRA SUBEDI, KATHMANDU, July 13: The Nepal Rastra Bank on Sunday unveiled its monetary policy for the fiscal year 2074/075 BS prioritizing agriculture, tourism, energy, small and cottage industries.

The macroeconomic policy released by the central bank involves liquidity management or money supply supporting fiscal policy of the government planning to achieve macroeconomic targets like inflation, economic growth, stability, balance of payment, liquidity and others.

Mandatory provision for banks to float 10 per cent of their loans in agriculture and five percent each to hydropower, and tourism sectors is a welcome step. The central bank has categorically mentioned to invest a quarter of the banks’ investment in the productive sector which is five per cent more than previous fiscal year.

However, former governor Dr Yubaraj Khatiwada said that the borrowers could invest in the real estate sector despite the amount is disbursed in the productive sector. “Monitoring mechanism of the central bank needs to be effective,” Dr Khatiwada suggested.

This year’s monetary policy’s major objective include attaining 7.2 per cent economic growth rate, tame inflation to 7 per cent, maintain broad money growth rate at 18 per cent, increase domestic credit by 27.8 per cent compared to the last fiscal year and to increase credit to the private sector to 20 per cent.

However, the monetary policy unveiled by Governor Dr Chiranjibi Nepal has not received a warm welcome from the industrialists, bankers and the business fraternity. Rather, the industrialists and entrepreneurs are ‘disheartened’ though the central bank claims that the monetary policy ensures complete instruments to cope with the emerging challenges and take the economy towards the right direction.

The monetary policy has invited criticism for not prioritizing economic growth and lacking sufficient instruments for capital flow to boost up economic growth. So, the monetary policy has been criticized for being short of effective monetary instruments to address the high interest rate and volatility of the market. Economic dimensions and the market size have increased in compared to last year, but the NRB has repeated the same ineffective and insufficient measures even in the changed context.

High interest rate despite sufficient liquidity is a problem created by the central bank itself, former governor Dr Khatiwada said. “The NRB could not forecast the economic scenario and there were lapses in monitoring of the BFIs. The central bank should review its policy-level shortcomings rather than overriding them,” the former Governor opined.

Likewise, the commercial banks should mandatorily flow 5 percent of their total investment to the disadvantaged groups, as the provision was made with the objective to enhance the economic condition of disadvantaged groups and communities. But, the investment is not going to the deprived sector directly rather it would be invested by the microfinance institutions.

According to the monetary policy, the banks and financial institutions would be provided with additional benefits if they reached the remote area. If the banks of ‘A’, ‘B’ and ‘C’ categories open their branches in the remote districts, they would be lent Rs 10 million without interest. But, the monetary policy is not clear on sending the banks and financial institutions (BFIs) in the local levels. The roadmap to send the commercial banks to the local levels is hazy.

Furthermore, the monetary policy is silent whether the commercial banks would be required to go to the local levels or there will be some incentives for them to do so.

Monetary policy in itself is not a sufficient measure rather a tool to support the government’s fiscal policy. Instead of the ritualistic presentation, the NRB through its announcement should dare mend the errors occurred/or committed during the last fiscal year.

In the words of Dr Khatiwada, “The NRB should carry out monitoring in the areas where loans are invested. The central bank should show its willingness to take action against those violating the central bank’s directive, especially on credit to core-capital-cum-deposit (CCD) ratio. And, most importantly the NRB should find the way to pull itself out of the self-created trap.” RSS