KATHMANDU, Sept 25: The Ministry of Finance (MoF) on Sunday formed a panel to study the banks and financial institutions (BFIs) raising the interest rate.
Amid widespread criticisms from different quarters for failing to stem interest rate, the government has moved forward to study the rationale of the BFIs recently increasing interest rates on fixed deposits. Citing to increase interest rates on loans from the first quarter end (mid-October) BFIs have hiked the interest rates on deposits.
Finance ministry has formed a study panel led by Joint-secretary Babu Ram Subedi. Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari has also been mulling to increase interest rates amid tightened monetary policy. However, numbers of NRB’s high ranking officials are not on the side of letting the BFIs to hike the interest rates.
Since mid-September, banks have increased their interest rates on fixed deposits by 10 percent to 12.13 percent. With the review of their base rate, the interest rate on loans is likely to cross 15 percent from next month.
While private sectors have heavily criticized the banks for hiking the interest rate, Finance Minister Janardan Sharma has also expressed his dissatisfaction over the banks’ move to hike interest rates in a number of public programs.
Currently, ordinary people are hit hard by the soaring prices of essentials. The increased interest rates will add an additional financial burden to the people’s daily expenses.
In addition, the increased interest rate will even play a role in further taking down the economic activities. It will adversely affect even the government revenue collection.