Entrepreneurs who have been pushing for softer loans said this lack of implementation of the provision is hurting them.[break]
“Despite our repeated requests to senior NRB officials, including the Governor and Nepal Bankers´ Association (NBA), no BFI is providing loan at 4.5 percent as per the central bank provision,” Madhu Babu Adhikari, chief program officer of Nepal Pashmina Industries Association (NPIA), told Republica on Tuesday.
Currently, BFIs are charging higher interest rates, ranging from 14 to 16.5 percent. Entrepreneurs have been lamenting that high interest rates have pushed their production cost sharply, weakening their competitiveness in the international market.
Monetary Policy for 2011/12 categorically states that BFIs have to issue loan to export industries, sick industries, small and cottage industries and groups bounds for foreign employment at 4.5 percent under the refinance facility. For this, NRB has promised them a refinance facility at 1.5 percent.
Ashok Rana, president of NBA, however, said banks are not interested to issue loans under the refinancing scheme as the demand for loans from the specified industries is of very small scale.
“It is not viable to issue a loan worth below Rs 50 million per customer. But whatever demands we are receiving under the refinancing scheme are bellow Rs 2.5 million. The limited period given for repayment is also very short,” said Rana.
He also claimed that customers seeking such loans are more concentrated on Nepal Bank Ltd and Rastriya Banijya Bank - the two public sector banks - rather than private sector BFIs.
Bhaskar Mani Gyawali, spokesperson of NRB said the central bank cannot force the BFIs to take benefit of refinance facility, if they deem making investments in those sectors is not viable.
“We have opened the door for easy loan to those specified sectors through our monetary policy. Hence, lending depends on the understanding and negotiation
between BFIs and customers. There would have been no problems for BFIs to issue loan under the refinancing scheme if they are convinced,” said Gyawali said.
He said BFIs could have shown a little interest to invest in those sectors in view of lack of loan requests from bonafide persons and industries that are capable of timely repayment of their loan. Under the refinancing scheme, loans should be repaid within six months.
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