KATHMANDU: Nepal Rastra Bank (NRB) Governor Dr. Chiranjeevi Nepal has said that the central bank will unveil a monetary policy that will force merger if banks and financial institutions refuse.

Speaking at a program organized by the Institute for Strategic and Socio-Economic Research (ISSR) and Pavilion Media Group at the Durbarmarg-based Pavilion Hall on Tuesday, Governor Nepal said that merger was the need of the hour.

Informing that 18 banks have expressed their readiness for a merger, he said that the central bank will facilitate an environment for a merger.

“NRB is bringing the policy encouraging merger following a detailed study. Security of depositors is our prime responsibility,” he said, “The central bank will take necessary action on those refusing merger and that could be scrapping license also.”

On the other hand, Chairman of Prabhu Bank Devi Bhattachan said that a forceful merger would be inappropriate.

He said that the monetary policy should not direct merger as all the banks have received a license and have met the capital requirement of Rs.8 billion.

Also speaking, President of Nepal Bankers’ Association Gyanendra Dhungana said that spread rate can’t be lowered than four percent.

He said that the monetary policy should address the issue of interest rate, increase refinance fund to one billion, include provision for electronic KYC form and merger between banks and financial institutions.

“Merger is the need of the hour. There is an unnecessary competition for deposit collection. That’s why we too had proposed merger. But, forcing merger would be inappropriate,” he said.

Similarly, Chairman of Global IME Bank and Vice Chairman of Federation of Nepalese Chambers of Commerce and Industry Chandra Dhakal said that banks and businessmen are debating over the interest rate.

He suggested that the monetary policy should aim at easing liquidity crunch, adding that the policy should create an environment for merger rather than forcing a merger.

Vice President of Federation of Nepalese Chamber of Commerce & Industries Kamlesh Kumar Agrawal said that inflation will not remain at the targeted percent due to the revenue-oriented budget.

He suggested that the monetary policy should have a clear system for transforming the informal economy to a formal economy.

Chairman of Pavilion Group Naresh Shrestha said that businessmen are hard hit by increased interest rate and suggested that the monetary policy should resolve the issue.

Also speaking, economist Govinda Nepal said that the monetary policy should support the government’s plan for prosperity.

Another economist, Dadhi Adhikari said that the monetary policy should address the high economic growth rate set by the government.

The central bank is unveiling the monetary policy for fiscal year 2019/20 on Friday.