Cut Down Interest Rates, FNCCI Tells NRB

Concerned by the high interest rate on loans for commercial sector, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) urged the Nepal Rastra Bank (NRB) to address the situation on December 10, 2018.

The Commerce body criticized the financial authority for abruptly increasing the interest rates, at a meeting with NRB Governor Chiranjibi Nepal.

“The banks have increased interest rates without considering the loan repayment capacity of the debtors, which will directly affect the cost of the ongoing projects while hitting hard the projects that are on pipeline,” reads FNCCI press statement.

The private sector has also demanded that NRB implement the following:

• Reduce the spread rate to 3 percent from the existing rate of 4.5 percent
• Reduce the threshold deposit collection from institutional depositors to 25 percent from 45 percent (of the total deposited amount)
• Creating a strong mechanism for bringing the informal sector’s cash inflow to the formal sector

Currently, firms securing a loan of NPR 500 million and more have to receive a credit rating from the concerned agency and have to pay a commission charge of 0.1 percent for this.

FNCCI has asked the central bank to increase the minimum loan amount to NPR 1 billion and reduce the commission fee.

Additionally, the Commerce authority asked for promotion of e-commerce and waiving the customs duty on Tibet-imported goods in an event when the payment is made through bank drafts, letter of credit or TT.

On the occasion, FNCCI also expressed concern over the government’s slow progress on spending the country’s capital expenditure.