The monetary policy 2021-22 has been welcomed by the commercial sector. They stated that if the macroeconomic strategy is correctly executed, it will provide relief to the Covid-19 affected industries, especially small and medium-sized enterprises (SMEs) and tourism businesses.
According to the Federation of Nepalese Chambers of Commerce and Industries (FNCCI), continuing refinance, restructuring, and rescheduling facilities will assist deliver favourable results, primarily for coronavirus-affected industries. “The provision of charging a maximum premium of two percentage points in the basic interest rate in credit of up to Rs 10 million to be accepted by SMEs will help boost access of small enterprises to bank loans,” according to a news release published by the FNCCI.
Furthermore, the elimination of the credit-to-core-capital-plus-deposit (CCD) ratio could help preserve appropriate liquidity in the market, according to FNCCI. The Nepal Rastra Bank (NRB) has asked banks and financial institutions (BFIs) to maintain the loan to deposit ratio at up to 90 percent by repealing the mandated CCD ratio. The rule required BFIs to keep the CCD ratio at 85 percent, which meant that financial institutions may not lend more than 85 percent of their deposit and core capital.
Similarly, the Confederation of Nepalese Sectors (CNI) has stated that credit flexibility for pandemic-affected industries will assist them in continuing and expanding their businesses while promoting economic activity. “The announcement to eliminate the penalty amount in the interest dues of tourism enterprises will aid in the recovery of associated businesses,” according to a CNI press release.