Finance Minister Surendra Pandey said that the government is serious about the lingering liquidity crunch, rising lending rates and challenges it can bring to revive yawning industrial sector. “We are looking into a number of options to deal with the problem and one of them is extending loans to banks and financial institutions against their good loans,” Pandey said. [break]
Speaking at an interaction program on the current problems of Nepal´s economy, minister Pandey said that the government is also looking into a number of possibilities to curb rising lending rates and hinted at using state-controlled institutional depositors for that purpose. Nepal Rastra Bank categorizes those loans as good that are constantly paying interests or have been defaulted for not more than three months.
Ministry Pandey also heavily came down against commercial banks and said that the banks grossly violated the general rule of credit-deposit ratio that has crossed 100 percent because CEOs of the banks are “too profit-oriented”.
Minister Pandey defended government´s decision to limit imports of gold and it has already produced good results in lowering balance of payment deficits.
Surbir Poudel, Chairman of Securities Board of Nepal said that the economy is lurking toward recession as it is facing multi-sectoral problems and he stressed upon the need to take both fiscal and monetary policies to deal with the satiation. Poudel refuted allegations that the current dip in stock market is the product of board´s wrong policy and argued that the market has declined because the economy is heading toward problems.
Surendra Bir Malakar, president of Nepal Chamber of Commerce warned that rising lending rate can harm struggling industries and said that government should be serious in taking measures that can help to lower the rates. He also pointed out toward weakening confidence of private sector and accused the government of not paying attention to address the issues raised by private sector.
Executive Director of Nepal Rastra Bank said the central bank is maintaining a close look in the economy and said recent policies that it has adopted have produced good results. Pandey also warned that shrinking agricultural production might have a serious impact on the overall economy because it is most influential factor in determining the level of income.
Leading banker Parshuram Chhetri said that government inability to make expenditure in proportion to growth in mobilizing revenue is one of the principal causes for ongoing liquidity crisis.
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