New Policies of NRB having Adverse Effect on Investment-Friendly Environment: NCC

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New Policies of NRB having Adverse Effect on Investment-Friendly Environment: NCC

August 12: Nepal Chamber of Commerce (NCC) has complained that the new policies of Nepal Rastra Bank (NRB) has further deteriorated the environment of doing business in the country. The new policy arrangements of the central bank has mostly affected small industries as well as entrepreneurs who want start their own business by taking loans from banks and financial  institutions.

The NCC noted that the Working Capital Loan Directive 2078 issued by the NRB indicates that the central bank is tightening credit flow and this would have an adverse effect on investment-friendly environment.

A statement issued by the NCC says that majority of the policies issued by the central bank only favour banks and financial institutions.

“The proposed limit of working capital loan is not sufficient for long-term credit business and also for the sales during the upcoming Dashain festival,” says a statement issued by NCC.

Banks are allowed to provide only up to 20 percent of the annual transaction amounts in working capital loans within the prescribed limit of Rs 10 million. However, the NCC has been demanding for loans up to 50 percent of the limit.

Stating that the borrowers are at the receiving end due to the new monetary policy of the central bank, the NCC has urged NRB to review the interest rates on loans as well.

“The borrowers who had taken loan at a certain interest rate are in further trouble due to the monetary policy of the central bank,” the statement further said, adding, “The borrowers are deeply trouble due to the unnatural rise in the base rate.”

NCC argued that the private sector was expecting a flexible policy but the policy adopted by the central bank to discourages credit flow will ultimately shrink the economy itself.



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