BIFs Contradict Central Bank Report on Providing Discount on Interest Rate

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BIFs Contradict Central Bank Report on Providing Discount on Interest Rate

August 7: Nepal Rastra Bank recently unveiled a report which stated that banks and financial institutions (BFIs) did not facilitate their customers in payment of loan installment and provide discount on interest rate during lockdown period as per its instruction. However, BFIs claimed that they have followed the central bank’s instruction and provide such facilities to the customers.

A survey report unveiled by NRB on Wednesday (August 5) mentions that 71.6 percent of industries and business enterprises could not avail the discount from BFIs despite the central bank’s directive. Only 17.3 percent of businesses took advantage of such privilege.

Nepal Bankers’ Association argues that the survey conducted from June 8 to 24 has not included the overall data.

“Nepal Rastra Bank directed us not to charge any interest to the customers on towards the end of April. However, BFIs could adjust the discounts only at the end of the fourth quarter (mid-July) of the last fiscal year in accordance to the banking system. Therefore, the survey excluded the discount we provided because the adjustment was made after the central bank’s study,” said Bhuvan Dahal, chairman of Nepal Bankers’ Association.

“All the details are available in the automated system. The discount might have been adjusted after the survey,” added Dahal.

The central bank had instructed BFIs to provide 10 percent discount on interest rate to customers who repay their loan between mid-March to mid-July. Likewise, the central bank had also ordered BFIs to provide 2 percent discount on interest rate to other customers till mid-July. However, the bankers had urged the central bank to review the decision and implement it only for the sectors affected by Covid-19. This is also another reason for the delay in implementation of the directive, says Dahal.

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