Nepal Rastra Bank’s Executive Director Guru Prasad Paudel has announced that the central bank will introduce a monetary policy designed to support the government’s budget.
Nepal Rastra Bank (NRB) Executive Director and spokesperson Guru Prasad Paudel shared on Sunday that the central bank plans to introduce a monetary policy that complements the current government’s budget.
Mr. Paudel made this statement during the ‘Decoding Modern Banking for Economic Journalists’ program. This event was organized by the Nepal Economic Journalists Association, in partnership with Nabil Bank.
Supporting the National Budget
He emphasized that the government has received significant public trust, and the budget sets a clear direction. Therefore, the Nepal Rastra Bank need to develop a monetary policy which helps achieve these goals. He confirmed that preparations for this policy are currently underway.
Optimism for Asset Management Company
Mr. Paudel expressed hope regarding the establishment of an Asset Management Company (AMC). This company would manage non-banking assets held by banks and financial institutions. He is optimistic that the AMC will be established this year, especially since the government has set a specific timeline for it.
He highlighted that the concept of an Asset Management Company has been discussed by the Nepal government and Nepal Rastra Bank since the year 2057/58 B.S. Paudel noted, “The current government have also take up this issue. Therefore, we are optimistic that it will now take a concrete form.”
Liquidity and Loan Flow Challenges
According to spokesperson Paudel, the financial system is currently seeing very low interest rates and a high amount of liquidity in banks. He explained that Nepal Rastra Bank is spending billions of rupees to manage this liquidity and keep interest rates stable within a certain range.
He also pointed out that banks and financial institutions now has good capacity to extend more loans. Despite this, loan growth is not happening even though the banking sector is in a position to lend.
Paudel questioned why credit is not flowing. He mentioned that the government is aiming for capital development projects, and the private sector is eager to move forward. He stressed the importance of finding ways to overcome this situation.
Focus on Small Sector Lending
Recently, the central bank has focused on increasing loan disbursements to small sectors. Mr. Paudel informed that banks and financial institutions can now evaluate and provide loans up to 10 lakh for small businesses independently. He also added that they are moving towards introducing a system for “P2P lending” which will allow loans to be issued without requiring extensive paperwork.
This article was originally published on https://bajarkochirfar.com. Translated with the help of AI and reviewed by our editorial team.
MONETARY POLICY, Nepal Rastra Bank, Budget, Asset Management Company, Liquidity, Interest Rates, Loan Flow, P2P Lending, Financial System, Nepal Economy
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