Finance Minister Janardan Sharma on Friday held a discussion with chief executive officers of 27 Group 'A' commercial banks on the problems facing the banks including a liquidity crunch and financial institutions and the solution needed.
The liquidity problem has briefly led to conflict among banks on the interest rate in the country wherein banks raised interest rates on deposits in a bid to make their lendable funds strong.
Now the Nepal Rastra Bank time and again issued repo worth millions of rupees in a bid to maintain the liquidity. On Friday alone, the central bank offered a repo to inject Rs 24 billion into the banking system. However, the matter has not improved.
In the talks, stating that loans banks and financial institutions have released in the market did not have much impact, Finance Minister Sharma asked them to invest in the areas that yield impactful results.
He also stressed the need for increasing economic growth on a par with loans released in the market. In view of the liquidity shortage, he asked them to focus on small for the release. The Minister asked the central bank to resolve any problem in banks and financial institutions as the government was ready to keep up with economic activities as required by the State.
On the occasion, President of the Nepal Bankers' Association Anil Upadhyay said that the time had come for banks and financial institutions to focus on lending small loans in view of the liquidity crunch. Participating representatives of banks demanded with the Minister a way out of the liquidity crunch.