“Even with decent spread (difference between deposit and lending rates) of 3 percent, the banks lending rates should have been at 13-14 percent at present,” he said. [break]
Commercial banks, citing the pressure to offer higher deposit rates to lure savings, have jacked up their lending rates to as high as 18 percent.
“Clearly, the banks were operating with higher spread rate,” Khatiwada said, responding to lawmakers´ query at the parliamentary Finance and Industrial Relations Committee. He further said that the central bank has been persuading them to narrow down this gap.
Speaking on the occasion, former finance minister Dr Ram Sharan Mahat and former governor Dr Tilak Rawal expressed concerns over rising lending rates, particularly referring to its adverse impact on economic activities and loans repayment.
´The central bank should closely monitor the situation and take appropriate measure as and when necessary. Otherwise, it might affect productive sectors business viability,” Mahat said.
Governor Khatiwada, however, said the central bank has arranged refinancing facility at 7 percent interest rates, which the priority sectors like tourism, hydropower, agriculture and small and medium enterprises can obtain at 10 percent interest rate.
“We are persuading the banks and financial institutions to pledge medium-term loans to infrastructure projects at around 12 percent interest rates,” he said.
Lawmakers also expressed concerns over lack of inspection and supervision of savings and credit co-operatives, which have mobilized as much as Rs 100 billion in deposits, promising higher interest rates up to 18 percent.
“Their undue high offer has exerted unnecessary pressure on banks. The government must form second-tier regulatory body to monitor them,” Dr Rawal said.
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