Money & Finance
The Nepal Rastra Bank is preparing for discussions with stakeholders for its second monetary policy review of the current fiscal. The country's central bank is expected to complete the review by the second week of February.
The NRB holds discussions with stakeholders and solicits suggestions before the policy review. It has called on stakeholders to submit their suggestions by February 3.
NRB spokesperson Gunakar Bhatta said that the central bank was preparing to hold discussions with stakeholders to solicit their suggestions.
"Suggestions have been requested in writing, but we haven't received them yet. Besides written suggestions, we will also conduct discussions," he said. The central bank is currently holding internal discussions on the monetary policy.
The NRB usually incorporates suggestions from stakeholders in the monetary policy review.
In addition, the Nepal Bankers Association is planning to discuss monetary policy issues. As the central bank did not incorporate its ideas in its review of the monetary policy in the first quarter, the association's suggestions will likely be based on pending issues.
Besides taking up 5-7 unaddressed issues, the association is holding a meeting to decide on a new agenda.
After missing out on the target of subsidised loans, the bankers are preparing to forward suggestions for its reconsideration.
Suggestion on ways to manage liquidity is another issue that the association includes in its suggestion to the NRB. The banking system still needs more liquidity, as it needs to be adequately managed.
The association is also raising the topic of interest rates. The bankers have indicated that they would repeat the demand for the inclusion of service charges in the half-yearly review.
The half-yearly review of the monetary policy will likely cover the topic of the marginal loan.
Although the NRB has removed the Rs40 million limit on margin loans from a single bank, it has retained the upper threshold of Rs120 million.
Amid the growing pressure from the share investors to remove the Rs120 million cap on margin lending, the NRB has indicated that it could adopt flexibility.
Finance Minister Bishnu Paudel has also instructed NRB Governor Maha Prasad Adhikari to refrain from making any policy decisions to affect investor sentiments.
According to NRB sources, the NRB is considering increasing the current ceiling of Rs120 million to anywhere between Rs250 million and Rs500 million.
Nepse had scaled new highs during the previous two terms of Finance Minister Paudel due to his soft policy towards the capital market.
The country's benchmark index reached 1,881 points during his first tenure at the Finance Ministry. The capital market achieved a historic high of 3,200 points when he was finance minister for the second time.
According to central bank sources, Paudel has already instructed Governor Adhikari to ease provisions in the monetary policy for the stock market.
Pressuring is also mounting on Finance Minister Paudel from businesspeople to reduce the interest rate on borrowing.
A few months earlier, a representative of the Federation of Nepalese Chambers of Commerce and Industries, an umbrella organisation of the country's private sector, met with the NRB governor. They say the high-interest rate has left industrialists in dire straits.
During the meeting, Governor Adhikari assured the FNCCI delegation that the central bank would address their legitimate demands during a half-yearly review of the monetary policy.
In addition, the upcoming monetary policy is likely to address the demands of NADA, the umbrella organisation of auto dealers, to increase the auto loan limit from 50 per cent.
