In its suggestions to the government on the upcoming monetary policy, the umbrella organization of Nepali industrialists also warned that the prolonged liquidity crunch in the financial system might lead to massive bank failures like the ones seen in US and Europe in the recent past.[break]
“The upcoming monetary policy of the Nepal Rastra Bank (NRB) must address these issues and have provisions to pump adequate liquidity into the banking system,” CNI said in a statement.
CNI has also suggested that the central bank come up with a comprehensive plan to address worsening liquidity situation. “The government must consider collecting government revenue through commercial banks and park their funds in banks. This will help ease the liquidity crunch in the system,” the statement added.
Expressing concern over soaring inflation, CNI stressed the need to formulate transparent policy to achieve long-term price stability. It also sought clear policies from the central monetary authority to bring down the rising interest rate in a bid to help the real estate sector manage the cost of capital.
“NRB´s existing policy and actions do not help achieve lower interest rates. To start with, NRB must consider reducing the repo and Treasury Bill rates that will help bring a positive sentiment in the market,” added the statement.
CNI also demanded that the high-level committee of the government chaired by the Finance Minister be made active by including private sector representatives. It, however, lauded the government initiatives of establish banks for infrastructure and energy development.
CNI has also sought meaningful assurance from the government to attract foreign direct investment in the country. It has urged the government to do the needful in routing remittance from India through official channel.
The umbrella organization of industrialists has also demanded that the government allow corporate houses, banks and financial institutions to raise resources from foreign countries under external commercial borrowing as well as direct equity investment.
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