KATHMANDU: As the government moves to amend the Integrated Act on Banks and Financial Institutions, stakeholders in the banking and financial sectors have raised concerns about the potential for a crisis in the banking industry, following issues faced by cooperatives.
Participants at an interaction program held on Tuesday in Durbar Marg stressed the need for immediate reforms to foster a more conducive environment for investment and economic growth.
The program, jointly organized by the Institute for Strategic and Socio-Economic Research (ISSR), Khabarhub.com, and Radio Candid, brought together policymakers, banking experts, and entrepreneurs to discuss challenges in the financial sector.
Ruling CPN-UML leader and former Finance Minister Surendra Pandey criticized the lack of a supportive environment for businesses in Nepal, attributing the economic stagnation to outdated bureaucratic practices.
“The economy struggles because of a reliance on foreign-drafted policies instead of crafting measures tailored to Nepal’s unique geographical and economic needs,” said Pandey.
He also urged Nepal Rastra Bank to balance foreign exchange reserves prudently, utilizing surplus funds effectively to stimulate growth.
Entrepreneurs also expressed frustration over restrictive banking policies that they argue hinder business development.
Karan Chaudhary, President of the NADA Automobiles Association of Nepal, lamented that monetary policies often create uncertainty, especially in the auto sector. He criticized outdated customs policies that remain in place despite improved foreign exchange reserves.
Kamlesh Agrawal, President of the Chamber of Commerce, highlighted issues with loan disbursement practices.
“Banks demand excessive collateral for loans and impose uniform restrictions regardless of the borrower’s financial standing. This approach stifles entrepreneurial growth,” said Agrawal.
Similarly, former Vice President of the Federation of Nepalese Chambers of Commerce and Industry, Dinesh Shrestha, called for more equitable loan policies, emphasizing the need to revise the rule limiting loans to 50 percent of a borrower’s income.
Nabil Bank Chair Upendra Poudel defended the banking sector, citing its role in fostering entrepreneurship and supporting sectors like hydropower.
“Many businesses have thrived due to financial institutions’ support,” he said.
Nepal Rastra Bank’s Executive Director, Guru Prasad Poudel, highlighted the correlation between GDP growth and the banking sector’s expansion. He also identified the IT sector as a promising area for investment and urged stakeholders to capitalize on its potential.
Former Chief Justice Kalyan Shrestha, however, warned of a potential banking crisis if reforms are delayed.
“The banking sector faces risks akin to those that plagued cooperatives,” he said, calling for a shift from punitive measures like blacklisting to policies that enable recovery and growth.
Economist Dr Bindu Lohani emphasized the urgency for transformative changes in banking policies, while former Governor of Nepal Rastra Bank, Dipendra Bahadur Chhetri, stressed the need for honesty and accountability across the economic spectrum.
Former Chief Secretary Shankar Das Bairagi advocated for policies promoting “Made in Nepal” products to reduce production costs and boost competitiveness in international markets.
Secretary to the Government of Nepal Madhukar Marasini assured stakeholders that the government is committed to creating an enabling business environment. However, he said that the private sector must lead efforts to stimulate economic growth, with the government playing a supportive role.
The interaction concluded with a call for collaborative efforts among policymakers, financial institutions, and the private sector to address systemic challenges and build a robust, inclusive economy.
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