September 27: The Nepal Chamber of Commerce has concluded that it is impossible to run businesses due to the excessive interest rates charged by banks.
The NCC has drawn the attention of Nepal Rastra Bank to this issue and has requested the central bank to control the excessive rise in interest rates. The umbrella body of private enterprises has submitted a nine-point demand to NRB regarding this issue.
Stating that the effect of high rate of interest on deposits is starting to affect the interest on loans the NCC requested the central bank to make the current spread rate and base rate of banks relevant. A statement issued by the NCC states that the rising interest rates has created a situation where the commercial activities of the country will come to a standstill.
It also states that high interest rates on deposits discourage investment in industries and increases the risk of financial instability.
The chamber demanded the removal of various types of service charges charged by banks and financial institutions while granting and renewing loans. The NCC also requested the central bank to bring down the interest rates to a single digit to meet the goal of high economic growth. It also demanded that the base rate of the banks should be kept as low as possible and a maximum of 2 percent premium should be added as in previous years.
The chamber stressed the need to maintain a fixed interest rate for a certain period on the loans provided for infrastructure development project and tourism sector. NCC also requested NRB to make arrangement to maintain a fixed interest rate for three months.
In addition, the chamber has emphasized on timely capital expenditure to address the liquidity crisis faced by the banking system.