KATHMANDU, May 22: Newly appointed Governor of Nepal Rastra Bank (NRB) Biswo Nath Poudel has pledged to work in collaboration with the government for an effective implementation of the annual budget while strengthening the supervision of the country’s financial system.
Assuming his office at the NRB on Wednesday, Poudel said he will render priority to devise monetary policy suitable to assist the government in enforcing the annual budget. “However, the central bank will not adopt measures to pressurize the financial sector unnecessarily in the name of strengthening supervision.”
After a two-month long tug-of-war, the government finally appointed Poudel as the head of the country’s apex monetary institution on Tuesday. Poudel is taking charge of the central bank at a time when the economy is facing several challenges. Experts say he will have to maintain financial sector stability, promote productive sector lending, and address the low confidence of the private sector.
Revised interest rate corridor system introduced
The NRB Governor Poudel expressed his commitment to address the demand of the International Monetary Fund to increase surveillance of the banks and financial institutions.
Poudel said proper mobilization of the country’s financial resources is a key to bring the economy back on track. “Depositors, borrowers, general people and even the government are now expecting the NRB’s effective role to rejuvenate the economy,” he said.
In a meeting with representatives of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), NRB Governor Poudel said the central bank will endorse stable and predictable policies. “The central bank will consider not taking ad hoc decisions; rather will incorporate stakeholders to maintain policy stability,” said Poudel.
Chandra Prasad Dhakal, president of the FNCCI, said the NRB needs to play a role to boost confidence in the private sector. “As the banks have been unable to increase loans even when the lending rate has plunged to its minimum, the central bank needs to adopt monetary and non-monetary tools to improve confidence of the private sector,” he added.
Implementing flexible measures to promote remittance inflow, giving priorities to economic activities in rural areas, revision of working capital guidelines and rescheduling and restructuring of private sector loans are among the suggestions put forth by the FNCCI. Likewise, the umbrella organisation also sought the NRB’s role in utilization of excess liquidity with banks for productive sectors like industries, refinancing facilities to small and medium enterprises, and fixation of differential lending rates to production and trading related businesses.
