In a set of suggestions forwarded to Nepal Rastra Bank for its upcoming Monetary Policy for the current fiscal year, Confederation of Nepalese Industries (CNI) has argued that the proposed reduction of CRR will help inject additional liquidity in the banking system, thereby helping the banks lower the rising lending rates. [break]
In a press statement issued on Sunday, CNI urged the central bank to defer the implementation of Statutory Liquidity Ratio (SLR) in view of the liquidity shortage and recognize vault cash maintained by the bank as part of SLR.
"This will help increase funds available for lending by the banks for its borrowers, which remains a major impediment for the growth of the business sectors," said the statement.
The statement has also asked NRB to permit domestic banks and corporate to have access to abroad financial resources, considering the current liquidity problems in the country and also to fund larger projects in Nepal.
The government should seriously consider facilitating institutional investors as well as NRNs from outside Nepal to invest through Nepal Stock Exchange (Nepse) and it should also initiate preparations for integrating Nepalese capital market with the international capital market, probably India, the statement added.
Regarding the long-running confusion over the polices adopted by NRB and Securities Board of Nepal (SEBON) regarding the dilution of promoters´ share at the financial institutions, CNI has urged both the regulators to facilitate sale of promoter shares in a more practical manner.
CNI has also advised the central bank to start working on formulating polices for initiation of venture capitals and private equity fund with due regulatory mechanism. It had also sought permission to allow regular Nepalese taxpayers to invest reasonable amounts overseas in foreign currency in line with the examples set by our neighboring countries.
"This will help the Nepalese investors create wealth outside the country which will eventually be brought back to the country," the statement added.
In order to effectively manage the NPA of financial institutions, the government and the central bank should be serious in setting up Asset Management Company, CNI said. It further urged NRB to initiate a strong lobby with the government for the implementation of the Secured Transaction Act and effectiveness of the Debt Recovery Tribunal.
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