NBA, the apex body of Nepal´s commercial banks, in a letter sent last week had pointed out a number of conditions set by the central bank, including a bar on using the refinance in extending Working Capital Loan, which is making banks extremely hard to take the refinance facilities. [break]
"We appeal to the central bank to relax some of the terms and conditions as some of the additional conditions imposed lately have come against the spirit of refinance facility that the central bank introduced to address acute shortage of liquidity,” the letter stated.
However, in a response sent to NBA on Tuesday, the central bank said that it was granting permissions for refinance only to the banks that fulfill its conditions. The central bank has rejected requests for refinance from those banks that do not meet the benchmarks for the new facilities and that it had not imposed new conditions to qualify for refinancing, said the letter.
Bankers said they were mainly objecting to the central bank´s latest decision to bar using the refinance to lend under Working Capital Loan.
The central bank had earlier specified exports, pharmaceuticals, tourism, production, small and medium scale industries, agriculture, cement and iron, and hydropower, power transmission and cable car as sectors eligible for investments from the refinance taken from the central bank.
Sources at the central bank informed myrepublica.com that NRB had recently turned down requests forwarded by Development Credit Bank Ltd, Laxmi Bank and Kist Bank for refinancing facility, stating that their exposure to real estate is more than the maximum limit set by it.
NRB, in April, had introduced the new refinance to financial institutions against the collaterals of good loans that the institutions own to deal with the worsening liquidity situation.
Earlier, Citizens Bank International and Clean Energy Development Bank had applied for refinance worth Rs 548 million and Rs 140 million respectively. However, official familiar with the development said NRB had approved refinance worth only Rs 400 million for Citizens Development Bank.
We are again forwarding our demand for remaining amount by pledging new collaterals, an official of Citizens Bank told myrepublica.com.
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