August 14: Finance Minister Dr Prakash Sharan Mahat on Sunday held a meeting with the bankers to discuss the challenges facing the banking system.

The meeting, which saw the participation of CEOs of the commercial banks at the Ministry of Finance, delved into reasons for limited demand for loan despite sufficient liquidity in the market.

In the recent days, the finance minister is holding consultations with the representatives of the private sector, donor agencies, regulatory bodies and other stakeholders regarding the interventions to be taken for reforms in economy.

Dr. Mahat posed pertinent questions to the participants: "Why has demands for loan not increased in the banks and financial institutions? How the banking sector can help in making economy floating? What the government and Nepal Rastra Bank should do to end the existing status?"

During the session, Sunil KC, Chairman of the Nepal Banker's Association, expressed concerns over the waning confidence levels in both the private sector and the banking industry. KC also cited confusion stemming from the taxation applied to FPOs (Further Public Offerings).

Furthermore, KC highlighted that funds held at the local level should be accounted for as deposits, emphasizing that approximately Rs 150 billion in deposits has dwindled since the commencement of the current fiscal year. KC predicted a downward trend in interest rates, with the possibility of rates reaching single digit.

The bankers suggested that the plotting of the land should be opened and the real estate market should be  relaxed and loan to the small and medium enterprises should be simplified. (RSS)