Nepal Rastra Bank (NRB) governor Yubaraj Khatiwada said on Sunday that the central bank could consider being flexible on the provision of seeking source of income without compromising Nepal’s obligation toward international norms to prevent money laundering.

“If there is any space for flexibility in this regard, NRB is ready to consider it,” he said during an interaction on the current financial problem organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Presently, depositors of more than Rs. 1 million have to disclose source of income.

Bankers have pointed out this provision as one of the main reasons behind the slow deposit growth.

He also made it clear that that the provision regarding the requirement of showing source of income was not intended to collect tax. Assuring depositors Khatiwada also made it clear that no bank was in crisis currently.

Given the entrepreneurs demand to slash interests on lending, the governor asked bankers to get refinance from NRB at cheaper rates by providing loans to good borrowers. The NRB provides refinancing for lending in productive sectors.

 He however asked entrepreneurs of real estate and housing not to expect loans at the usual interest rate of 10-12 percent.

Regarding the shortage of Indian currency, he said that there was no dearth of IC to pay through banking system. “There is shortage of IC only in cash.”

The entrepreneurs however complained that they were being hounded by banks to pay loans without further credit to complete the project. They also complained about the rise in interest rate before the expiry of already agreed revision date.

Bankers however said that they were compelled to hike interest on loans prematurely due to similar situation to increase interest on deposits.

FNCCI president Kush Kumar Joshi said that liquidity crunch, higher interest rate and spread rate between interest rate on deposits and credit were major concerns of entrepreneurs. 

Keshav Acharya, senior economic advisor at the finance ministry stressed that the solutions should be sought by classifying whether they arose out of structural problem or policies. 

courtesy:the kathmandu post