KATHMANDU, July 18: The NRB unveiled its monetary policy for the current fiscal year 2020/21 introducing a number of relief measures for businesses battered by COVID-19. The private sector that has been bearing the brunt of the pandemic had pinned its hope on the monetary policy for revival and recovery.

Various business organizations had even provided the central bank their recommendations to help weather the crisis that thousands of businesses are facing due to the COVID-19 and subsequent containment measures introduced by the government to stop the spread of coronavirus.  

Republica talked to some private sector leaders to understand whether the monetary policy was able to meet their expectations. Their responses:

‘Refinancing fund facility an important assistance’

Sajan Shakya, Secretary General
Hotel Association of Nepal

The provisions for the tourism industry especially for hotels are very encouraging for the sector. The government has decided to extend the moratorium on loan repayment for businesses including hotels suffering from the impact of COVID-19. We see it as a very encouraging move from the central bank toward the revival of the hospitality sector. Tourism in Nepal has been hit hard by the pandemic with no business on sight.  In this context, the refinancing fund scheme for the rehabilitation of the tourism sector is an important assistance for us. We welcome this scheme.

‘Focus should be on implementation’

Reeta Simha, President
Federation of Women Entrepreneurs Association of Nepal

We had made various demands to revive many businesses that are likely to get closed as they are unable to bear up against the current crisis. Businesses run by women are on the verge of collapse. Without the direct assistance from the government or relief from the Nepal Rastra Bank, it will be hard for them to survive, let alone recover. However, we think the monetary policy will help in providing relief to women entrepreneurs through cheaper loans and moratoriums on repayment. While small businesses may find the  monetary policy supportive, we will have to see how well it is implemented. The overall provisions make us optimistic. If implemented, small businesses run by women stand to benefit from the monetary policy.

‘Monetary policy has addressed most of our concerns’

Satish More
President, Confederation of Nepalese Industries

I welcome the monetary policy presented by Nepal Rastra Bank. The policy has addressed the suggestions that we had presented to the central bank. Some measures such as increase in credit to core capital cum deposit (CCD) ratio, refinance service and reliefs announced for the tourism industry and small and medium sized enterprises will help to save businesses at a time of this global pandemic that has threatened the survival of thousands of businesses across the country. Likewise, the measures adopted by the monetary policy will help lower the interest rates. When businesses get loans at lower interest rates, the overall cost of the businesses will also decline. Although the monetary policy has addressed many concerns of the private sector, the central bank should proactively work to make sure that they are implemented.

Refinancing rate should have been lowered

Rajesh Kaji Shrestha
President, Nepal Chamber of Commerce

The central bank has increased the lending requirement by banks and financial institutions in the agricultural sector to 15 percent from the existing 10 percent. The measure will help generate employment opportunities in the agricultural sector. Also, the country will advance toward becoming self-reliant in agricultural products. The announcement to extend the repayment period to at least a year is another positive part of the policy. Had the central bank lowered the spread rate, the coronavirus-hit businesses would have got some relief at the time of the pandemic. Likewise, the interest rate on refinancing should have been set at three percent rather than five percent, so that the businesses would get a much-needed relief.

‘Monetary policy is balanced’ 

Sunil KC
CEO, NMB Bank Ltd

The monetary policy is balanced. The monetary policy announced some innovative instruments like energy and agriculture bonds  for banks to mobilize resources. With relief measures through moratoriums and loan restructuring, banks will be able to help businesses impacted by COVID-19 to work out on their revival plan. The decision of the central bank to cap the cash dividend of banks to 30 percent of their profit may hit banking stocks. Raising the CCD ratio (prudential lending limit) to 85 percent from 80 percent will help to free up nearly 80 billion of lendable funds for banks. This measure can be seen as helpful in liquidity management for banks as we may see an uptick in consumption after the situation returns to normality and raise demands for loans.   

 
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