Kathmandu. Former governors of the Nepal Rastra Bank, Maha Prasad Adhikari and Dipendra Bahadur Chhetri have stressed the need to adopt policies to revitalize economic activities while maintaining the autonomy of the NRB while formulating the upcoming monetary policy.
During a discussion on the monetary policy held at the Finance Committee of the House of Representatives on Sunday, former Governor Adhikari said that the more independent and autonomous the NRB is, the easier it would be for the Finance Ministry.
He said, “The more autonomous the NRB becomes, the more independently it prepares the monetary policy, the easier it will be for the Ministry of Finance.” There should not be a situation where the Ministry of Finance gives directives and the Rastra Bank does not follow. Suggestions should be given as guidance rather than guidance. ’
He said that although there is sufficient liquidity, low interest rate and remittance in the banking system, all policy provisions should not be removed on the basis of this.
“Policies should not be removed in the name of ease just because there is ease everywhere, there is no need for money, there is enough liquidity and remittances are also coming in,” he said.
The official said that it is a matter of concern that the demand for loans has not increased despite adequate liquidity and low interest rates. “The overall state of economic activity is unique. Interest rates have fallen sharply, but demand for credit is falling. There are definite reasons behind this. New trends, including online shopping, have also had an impact,” he said.
Stating that the monetary policy is a very technical and predictable issue, he said the internal and external economic situation of the country would determine its direction.
“Given the strong economic indicators, the central bank is unlikely to tighten the bank rate, policy rate or interest rate corridor further,” he said.
Similarly, Dipendra Bahadur Chhetri, another governor of Nepal Rastra Bank, said that although the fiscal policy is the responsibility of the government, it is the responsibility of the NRB to determine the interest rate and exchange rate.
“If fiscal policy is the domain of the government, then the central bank has the exclusive right to determine the interest rate and exchange rate. But the government’s interference is affecting the autonomy of the bank,” he said.
Stating that some women have been forced to adopt indecent profession due to inability to repay loans, Chhetri said the monetary policy should address this issue sensitively.
Stressing on the need of clarity on the role of the NRB in the regulation of the cooperative sector, he said remittance was the main basis for the strong foreign exchange reserve of Nepal.
