The rates have been slashed to 1.5 percent from 2 percent, said Governor Dr Yuva Raj Khatiwada. The central bank has also restricted the banks and financial institutions (BFIs) not to charge more than 4 percent interest rate while lending the same to exporters. [break]
Khatiwada hoped that it would give new impetus to export trade, which has declined by 8 percent over the first eight months of the current fiscal year.
NRB statistics show that country´s imports, on the other hand, soared by 43.9 percent during the period, raising country´s trade deficit to Rs 213.33 billion. As remittance receipt continued to grow at lower rate of 9.9 percent, balance of payment deficit during the first eight months of 2009/10 jumped to Rs 23.53 billion.
Dr Khatiwada also raised concerns over high inflation, which in mid-March stood at 11.2 percent. “In a country where economy is expected to grow at mere 3.5 percent, such a high inflation is a big mismatch,” he said. He further added that the central bank in the new fiscal year will adopt a monetary policy that will not cast inflationary pressure.
Governor Khatiwada tagged low economic growth, high inflation, dipping exports, soaring trade deficit, huge current account and balance of payment deficits, liquidity crunch and the need to increase the supervisory capacity as major challenges facing the central bank.
“But we are committed to resolve these issues,” he said, addressing a program organized to mark 55th anniversary of the NRB.
On the occasion, he also felicitated 79 employees who served the central bank for 20 years.
Dr Khatiwada, who has been pushing for increasing research activities, also noted that he was in favor of outsourcing the task in case of manpower constraint. He said improving access to finances in rural areas was his top priority.
He said the central bank has already forwarded a draft of Micro-Finance Act to Ministry of Finance to promote establishment of micro-finance institutions and development banks in rural areas.
He also said the two largest commercial banks -- Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB) -- subjected to financial sector reforms have reached a stage where they can be privatized. “These two banks can be efficiently run by injecting additional capital,” he said.
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