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'summary' => ' Nepal Rastra Bank (NRB) in the monetary policy for the upcoming fiscal year 2017/18 has adopted liquidity management measures to help the government meet economic growth rate target of 7.2 percent in the next fiscal year. ',
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<p><strong>NRB has projected an increase in the total domestic credit by 27.8 percent which will help to meet the targeted economic growth rate in FY2017/18.</strong></p>
<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
<p>In such situation, the central bank should have adopted proper measures to create stability in rate of interest to increase investible capital, according to the experts.</p>
<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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<p><strong>NRB has projected an increase in the total domestic credit by 27.8 percent which will help to meet the targeted economic growth rate in FY2017/18.</strong></p>
<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
<p>In such situation, the central bank should have adopted proper measures to create stability in rate of interest to increase investible capital, according to the experts.</p>
<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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<p><strong>NRB has projected an increase in the total domestic credit by 27.8 percent which will help to meet the targeted economic growth rate in FY2017/18.</strong></p>
<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
<p>In such situation, the central bank should have adopted proper measures to create stability in rate of interest to increase investible capital, according to the experts.</p>
<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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<p><strong>NRB has projected an increase in the total domestic credit by 27.8 percent which will help to meet the targeted economic growth rate in FY2017/18.</strong></p>
<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
<p>In such situation, the central bank should have adopted proper measures to create stability in rate of interest to increase investible capital, according to the experts.</p>
<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
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<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
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<p><strong>NRB has projected an increase in the total domestic credit by 27.8 percent which will help to meet the targeted economic growth rate in FY2017/18.</strong></p>
<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
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<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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July 10: Nepal Rastra Bank (NRB) in the monetary policy for the upcoming fiscal year 2017/18 has adopted liquidity management measures to help the government meet economic growth rate target of 7.2 percent in the next fiscal year. However, the line mentioned in the monetary policy and the policy tools adopted for its implementation indicate otherwise. This has led experts to say that the new monetary policy is ‘ambiguous’.
NRB has projected an increase in the total domestic credit by 27.8 percent which will help to meet the targeted economic growth rate in FY2017/18.
“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”
Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts.
NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (SLR) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.
Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs.
Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.
“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.
Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.
Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.
In such situation, the central bank should have adopted proper measures to create stability in rate of interest to increase investible capital, according to the experts.
In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy.
This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.
The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth.
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<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
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<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
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<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
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<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
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<p><strong>“The monetary policy has set the target to increase domestic credit in line with the budget announced by the government,” states the policy, adding, “The ceiling for lending in the private sector has been increased to 20 percent.”</strong></p>
<p><strong>Experts argue that there is need of investment in private sector to meet the target of economic growth. However, the monetary policy has failed to take concrete measures to sort out two big challenges that have surfaced in the banking sector at present, according to the experts. </strong></p>
<p><strong>NRB in the monetary policy has dampened the expectations of many who have hoped that the central banking authority would take steps to ease the current difficulties in loan investments of BFIs. The central bank was expected to revise the </strong>core-capital-cum-deposit (CCD) ratio, cash reserve ratio (CRR) and statutory liquidity ratio (<em>SLR</em>) to ensure the adequacy of investible capital in the banking sector. But the new monetary policy has even scrapped the facilities that were provided by the mid-term review of the monetary policy of the current fiscal year.</p>
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<p>Bankers say that if the current situation persists and the collection of deposits does not increase significantly, the new arrangement will further curtail the lending capacity of BFIs. </p>
<p>Stakeholders claim that instead of exploring possibilities of mobilising new sources, NRB has blocked the source of long-term loan investment by lowering the ceiling of deposit.</p>
<p>“The new monetary policy has done nothing but deprived us from the source of loan investment that we had until now,” said a CEO of a bank on condition of anonymity.</p>
<p>Confederation of Nepalese Industries (CNI) issued a press statement saying that the monetary policy failed to create a favorable environment to expand investment in the industrial sector.</p>
<p>Likewise, another challenge in meeting the target of economic growth is the high rate of interest. The wrong step taken by last year’s monetary policy caused scarcity of investible capital resulting in the doubling of rate of interest within six months. Likewise, fluctuation in interest rate has been prevailing due to competition among BFIs to attract depositors.</p>
<p>In such situation, the central bank should have adopted proper measures to create stability in rate of interest to increase investible capital, according to the experts.</p>
<p><strong>In this regard, industrialists and bankers had been demanding revision in CCD ratio and lowering CRR. But instead of addressing these issues, the NRB took tough measures through the new monetary policy. </strong></p>
<p><strong>This indicates that the NRB is only interested in regulating and controlling the BFIs instead of solving the prevailing problems and the steps taken by the central bank won’t be helpful to attract investors, create employment opportunities and meet the target of economic growth, argue experts.</strong></p>
<p><strong>The NRB has also been criticized for taking tough measures instead of adopting traditional means to control inflation. The monetary policy has a target to keep inflation below 7 percent in the upcoming FY. However, economists argue that price stability isn’t possible without economic growth. </strong></p>
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