The apex body of the Nepali private sector, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Monday said that the Monetary Policy for the Fiscal Year 2022/23 unveiled by the Nepal Rastra Bank (NRB) on Friday has failed to excite the private sector.
Issuing a statement on Monday, FNCCI said the monetary policy has taken the policy of increasing interest rates by absorbing liquidity and reducing consumption.
The FNCCI has said the monetary policy has failed to bring any policies for export promotion and import substitution. It, however, hailed policy to channelize remittances to formal channels.
The decision to raise Capital Reserve Ratio (CRR) from 3% to 4% will reduce the banks’ lending capacity by around Rs 50 billion, it said. “The decision to raise policy rates to 8.5% from the existing 7% will push bank interest rates higher,” the FNCCI said in the statement. “As deposit collection is not rising despite increasing interest rates, the new provisions will only increase interest rates.”
Though loans will be expensive due to tight policies, the FNCCI has said that it won’t be easy to contain inflation at the desired limit through monetary instruments.
“The central bank has addressed our demands for the differential interest rates on loans extended to trade and productive sectors,” FNCCI said.
