The House of Representatives Finance Committee has directed Nepal Rastra Bank to focus on implementing relief, subsidy and stimulus programs to revive the pandemic-hit economy through monetary policy in the current fiscal year.
The committee’s chairman, Krishna Prasad Dahal, said the committee issued a 17-point directive, including promoting key dynamic sectors of the economy and achieving the goal of rapid growth.
The committee directed the central bank to contribute a certain amount to the Enterprise Regulation Fund, which was established to compensate workers in small, private and large enterprises, tourism, private educational institutions, transportation, and the film and media industries, and also to support the revitalization of enterprises and their efficient operation.
President Dahal also said that the committee instructed the central bank to expand the scope and maximum size, as the 5 percent interest rates subsidized by the NRS have had a positive impact on enterprises affected by COVID-19.
The Committee urged the central bank to expand the scope and cap of subsidized interest rate loans for micro, small, and medium enterprises, as well as commercial agriculture, youth, enterprises, and individuals returning from abroad.
Committee Secretary Dr. Surendra Aryal said the committee also directed the NRA to develop an effective program to provide loans of up to 2.5 million rupees at one percent interest rate to motivate young entrepreneurs in starting businesses.
The committee also urged the NRA to focus monetary policy on mobilizing resources for economic growth, promoting domestic entrepreneurship and exports, replacing imports, and the manufacturing-oriented sector.
It pointed out that measures should be taken at the policy level to take into account the maintenance of financial stability. The committee suggested that the National Bank should take measures to contain the foreign reserve deficit and prevent the import of unnecessary luxury goods.
Similarly, the NGO was urged to develop policies to promote mergers of banks and financial institutions based on need, opportunity and competition.
It was pointed out that the various fees charged for services provided by banks and financial institutions should be made transparent in countries that have adopted best practices.
Likewise, the Committee ordered the restructuring and repricing of the loan facilities granted to various companies in the current fiscal year through an analysis of the impact of COVID-19 on the economy.
It is emphasized that monetary policy should support overall economic stability, ensure sustainable development through rapid economic growth, promote financial sector access, financial sector stability, and the development of a safe, sound, and efficient payment system.
Commercial and development banks are encouraged to provide immediate subsidized loans to their branches and create jobs through the subsidized loan program.
Similarly, it is suggested that the new monetary policy should include clauses on mandatory provisions for banks to invest in areas identified in the budget.
Similarly, the Committee urged the Central Bank to implement a refinancing system and develop procedures that would allow a large number of small businesses to benefit from it.
In addition, the Committee noted that government institutions should be results-oriented and economize through austerity measures in unproductive sectors in the current context of COVID-19.