CBFIN States Monetary Policy Is Forward-Looking Despite Unaddressed Suggestions

Following a review of the news summaries, the Nepal Bankers’ Association (CBFIN) has responded positively to the upcoming fiscal year’s monetary policy, describing it as forward-looking and balanced. The association emphasized that the policy sends a positive message to the private sector while aiding in maintaining the stability of the financial sector. CBFIN welcomed the policy measures aimed at managing non-performing loans and simplifying banking services as constructive steps. Kathmandu, 26 Ashad — The Nepal Bankers’ Association (CBFIN) has expressed that the monetary policy for the fiscal year 2083/84 introduced by Nepal Rastra Bank is forward-looking. Although the association’s suggestions were not incorporated, it acknowledged that the policy gives a positive signal to the private sector. CBFIN views the policy as focused on maintaining price stability and financial sector resilience.

Furthermore, CBFIN highlighted that the monetary policy adopts balanced monetary guidelines with regulatory simplification and the preservation of overall economic equilibrium. It noted that the policy marks a departure from traditional frameworks by including various regulatory measures that positively signal the financial system and private sector. The association pointed out that addressing the management of inactive loans and loan restructuring pressures in troubled industries will foster a more predictable business environment.

The decision to maintain policy rates, standing deposit facility rates, bank rates, cash reserve ratio, statutory liquidity ratio, and standing liquidity facility unchanged is seen as positive for ensuring policy stability. Additionally, CBFIN responded favorably to policies designed to make branch openings and closures more flexible, encourage the digitization of financial services, and reduce operational expenses for banks. The encouragement of commercial banks to invest in foreign government securities to facilitate liquidity management via foreign currency purchases, along with policy instruments like sterilized interventions during foreign exchange purchases, was also described as prudent and forward-looking.

CBFIN had recommended the central bank consider regulatory relaxations concerning risk-based loan loss provisions, loss provisions based on total risks for secured loans, and capital adequacy. Though these suggestions remain unaddressed, the association expects that integrated directives will further amend aspects related to the current economic environment, rising capital pressure on banks, non-performing loan management, and enhancing loan flow to the private sector. CBFIN underscored the association’s belief that addressing these areas is vital for significantly contributing to the Nepalese government’s economic expansion goals. The association pledged continued collaboration with Nepal Rastra Bank and the government to ensure effective implementation of monetary policy provisions, thereby maintaining financial stability and strengthening the banking system to be robust, competitive, and capable.