CNI has requested Nepal Rastra Bank (NRB) to do the needful to ensure that liquidity does not flow into real estate sector and stock market.
Narendra Kumar Basnyat, president of CNI, said that they have provided various suggestions to the Ministry of Finance, National Planning Commission and NRB through their 'Post-Earthquake Economic Recovery Plan'.Among others, the plan includes relief and rehabilitation plan, establishing recovery fund for small and medium enterprises (SMEs), suggestions to make amendments to fiscal and monetary policy as well as change tax and custom duties, and adopting various policy measures, among others.
CNI prepared the plan with the help of foreign experts after conducting thorough study of post-earthquake recovery plans of countries like Haiti, Japan and Sri Lanka.
It plans to submit its report to the government very soon.
Hari Bhakta Sharma, senior vice president of CNI, said Cash Reserve Raito (CRR) for banks must be fixed at 4 percent, Statutory Liquidity Ratio (SLR) at 8 percent and Capital Credit Deposit (CCD) ratio at 88 percent.
At present CRR requirement is 6 percent for commercial banks, five percent for development banks and 4 percent for finance companies. Similarly, SLR is 12 percent for commercial banks, 11 percent for development banks and 10 percent for finance companies.
CNI has also requested the central bank to buy back assets i.e. bonds with various maturity periods from the market and relax rules regarding provisioning for at least one year to allow the banking system to consolidate. It has also suggested creating an interest rate corridor through repo and reverse repo rates to keep the rates controlled.
Similarly, it has asked to government to increase income tax exemption limit for individuals and families to Rs 500,000 each.
Other suggestions given by CNI are adopting different policy measures like reducing corporate tax rate by 5 percent for three years to reduce capital flight, reduce VAT rate to 10 percent, extend line of credit to insurance companies and make it available at interest rate of 3 percent for five years, make standard custom policy for import of construction materials and charge only 5 percent customs duty on such imports.
CNI has also requested Beema Samiti – the insurance sector regulator -- to start correspondence with Group Insurance Commission and other reinsurers to get at least 50 percent of expected payouts in the country.
Basnyat said that the government, private and non-profit organizations should work as a team to ensure efficient and effective roll out of relief measures. "For this, the government must shortlist different organizations qualified to partner with government and a joint secretary or similar level official should be nominated to each partner organization. These organizations should be allotted funds from Prime Minister Disaster Relief Fund for specific relief and rehabilitation objectives and must be allowed to receive donations in cash and kind," added Basnyat.
CNI TO ESTABLISH BUSINESS RECOVERY CENTER
CNI, in association with other institutions, is working to establish a Business Recovery Center (BRC) mainly for micro, small and medium scale enterprises (MSMEs).
According to Sharma, BRC will gather and share information regarding inventory of small businesses, undertake damage assessments and link to the post-disaster need assessment of the government, and establish resource centers with partner organizations to provide business owners with materials on building their business and accessing post-disaster services and provide financial package for them.
BRC also includes a provision that bars lenders from recovering principle or interest amount from the affected persons for two years and reschedule the amount not collected during the two years for a period of seven years in case of agriculture loan. BRC will also provide cash assistance for MSMEs located in highly affected districts at the rate of 60 percent of total investment, and capitalize a grant program for small business like Business Investment Recovery Development Fund proposed to the government.
It will also provide technical assistance in strategic planning, business or financial planning and product development for continuing their businesses.
HCI TO BUILD 1,000 RESILIENT HOMES
Himalayan Climate Initiative (HCI), in association with Confederation of Nepalese Industries (CNI), will build 1,000 resilient homes in heavily affected rural areas and provide skills and supplies to rapidly build climate-smart, earthquake-resistant homes.
According to HCI, the funds for the project will be collected from donors worldwide.
CNI will assist HCI in securing dependable and affordable supply chain in making resilient homes and encourage its members to fund such homes.
According to HCI, the resilient homes have earthquake-resistant simple and intuitive design that can be constructed by hand in four hours by home owners themselves. The homes are made by using tarpaulins, plastic sheeting, and corrugated sheets as walls. Permanent wall can also be made, according to HCI officials.
"The home will have a verandah and it is easy to install rain water harvesting system. The homes can be easily dismantled, relocated or sold. It is moveable asset and can serve as collateral to secure loan," HCI said in a statement.
HCI has fixed the wholesale price of resilient homes at Rs 60,000, excluding the cost of 4-inch by 4-inch toilet with pan and piping and transportation cost.
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