The central bank sought strategic plans of the banks to increase financing in the national priority sectors, particularly ones that boost productions, displace imports and also give new impetus to exports growth. [break]
“The step comes as a move to implement the monetary policy´s vision, under which the central bank had announced to double the investment of commercial banks in the productive sector,” an NRB official told Republica.
According to NRB, the banks have so far funneled only an average of 10 percent of their total loans and investment in productive sectors like agriculture, small and medium enterprises, large scale manufacturing, tourism industry and hydropower, among others. The commercial banks have issued Rs 482.83 billion in loans as at mid-October 2010.
“Loans exposure in productive sectors varies from bank to bank, but their contribution to industrial development is only nominal. This doesn´t augur well for the economy in the long run,” the source added.
He disclosed that some of the banks have already forwarded their plans.
The bankers in general said they welcome the central bank´s instruction. However, some of them in person complained that the step was central bank´s ´unwanted intervention´ in their operations.
They argued that working out a long-term strategic plan at a time when the banks are facing problems to manage their liquidity on day-to-day operations was a serious mismatch.
However, leading bankers and the central bank officials stated that it will eventually deliver positive results in few years, fostering industrial development, creating employment and spurring exports growth.
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