Monetary Policy helps for loan expansion: Governor Adhikari

Governor of the Nepal Rastra Bank (NRB), Maha Prasad Adhikari, has said the monetary police released today would ease in loan expansion of banks and financial institutions.

Responding to queries of the media persons after unveiling of the monetary policy, he shared that it has been expected that the market would be vibrant after loan expansion.

Governor Adhikari mentioned that disbursement of loan would increase as the provision of capital fund arrangement of banks and financial institutions has been made flexible.

"Banks and financial institutions were unable to expand loan in lack of arrangement of capital fund despite having sufficient liquidity. Expanding loan means to increase loan disbursement. We have set a goal that 12.5 per cent of loan will be disbursed in the current fiscal year", explained Adhikari.

It has been projected through monetary policy that broad money supply would be 12 per cent for the current fiscal year.

Similarly, he stressed that some provisions have been brought in the monetary policy to ease the construction sector which is in trouble for not getting payment from the government.

"There is a multi-faceted effects due to trouble of construction related sector and cooperative sector. There was a situation where the construction companies did not get contract after their cheques bounced, blacklisted after they did not get their payment on time", added the Governor.

Through the Monetary Policy, the NRB has extended the period for paying the principal and interest of the loans issued to the construction entrepreneurs until December 15, 2024, a provision has been made not to put the contractors in the black list only on the basis of check bounce until another provision is made on notice of loans, a separate arrangement would be made regarding the provision on the ceiling of credit rating while utilizing the banking facilities and facilities outside the ledger among the loans.

Similarly, regarding the loans arising through claims on surety of construction entrepreneurs, provisions have been made on loan classification and maintaining the loan loss as other loans for the current fiscal year from the date the loan was created.

Governor Adhikari claimed that a flexible monetary policy has been brought in a balanced and cautious manner so that the overall economic and financial system foes not face problem. He opined that the provisions in the monetary policy alone would not be enough to put to an end the slowdown seen in the existing economy.

"It begets more risk if efforts are made to address all things only through the monetary policy. The monetary policy gives stability to the interest rate in the market and at the same time creates the environment for investment. Works should be carried out ahead synchronization among various entities and policies," the NRB Governor asserted.