“But this doesn´t mean that the problem has been resolved permanently. Large amount of money is still in the informal sector,” he said, speaking at a program organized by NRB Employees´ Union. [break]He also said the central bank was positive about controlling informal sectors like ´dhukuti´ to bring the money back into banking channel.
Stating that the central bank should not be held responsible for all the wrongdoings in BFIs, Khatiwada said it is not possible to keep the record of individual accounts in more than 100 BFIs on daily basis. “This problem can be addressed only if BFIs adopt necessary measures for self-regulation,” he added.
Criticizing the BFIs for hiding their woes, Khatiwada urged officials of BFIs to let the central bank know their problems and work jointly for recouping the realty loans and managing liquidity in the financial system.
The governor also requested BFIs not to increase deposit rates in haste. “I request BFI officials to be cautious while revising rates. They must adopt wait and watch policy to respond to this situation,” Khatiwada said, requesting them to increase investment in the productive sector.
“Sustained liquidity can´t be achieved in absence of economic activities” he added.
Presenting a working paper titled ´Macroeconomic Situation and Monetary Policy´, Acting Executive Director of NRB Dr Min Bahadur Shrestha said rise in food and beverage prices is the major factor behind surging inflation. He also said inflation has increased over the past three years mainly due to rise in imports. “While export has remained all the same, import increased by more than three-fold over the past decade,” Shrestha said.
Similarly, Bhisma Raj Dhungana, director of NRB, suggested the BFIs to take the central bank´s instruction positively.
“NRB´s instruction is aimed at guiding the BFIs to deal with problems facing them,” Dhungana said. Stating that the central bank´s decision on merger was aimed at improving financial health of BFIs, he requested BFI officials not to expect more incentives. “How wise is it to seek benefits while visiting a doctor for treatment?” he questioned.
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