April 28: Governor of Nepal Rastra Bank (NRB) Mahaprasad Adhikari has claimed that the economy is gradually returning to its rhythm. Adhikari said that the interest rates of the banks have started to decrease with the decline in the external pressure on the economy, and this in turn will gradually improve the economic activities in the domestic market.
Speaking at a program organized on the occasion of the 68th anniversary of NRB on Thursday, Governor Adhikari said that the liquidity situation of the banking system is improving along with the ease in the external sector. He claimed that domestic economic activities have also started to improve as banks and financial institutions have started reducing the interest rates.
"Although the liquidity management has become easier with the improvement in the external sector of the economy, the pressure on inflation due to international reasons is still there," he said.
Governor Adhikari said that due to the efforts of the central bank and the Government of Nepal, the pressure of the external sector on the economy has decreased. He said that the government had banned the import of 10 luxury items and the situation has improved since October when the central bank implemented the provision of cash margin for the import of various items. He added that the interest rates of the banks are going to decline due the improvement in the foreign currency reserves.
Governor Adhikari said that the improvement in foreign exchange reserves has resulted in an increase in the liquidity situation of the banking system and this is also reducing the interest rate.
"The pressure on interest rates has started to decrease due to the improvement in liquidity," he said, adding, "Banks and financial institutions have also started reducing interest rates on deposits and loans."
The governor claimed that the financial sector is safe even though the banks have been under pressure in recent times due to bad loans. He mentioned that Nepal's banks and financial institutions are in a strong state in terms of indicators such as bad loans of banks, loan recovery situation among others.
