Santosh Koirala Emphasizes the Need for Flexibility in Monetary Policy

Santosh Koirala, President of the Nepal Bankers’ Association, has highlighted the necessity for flexibility in the upcoming monetary policy to keep the economy active. He noted that the average return on banks is capped at around seven percent, clarifying that banks are not excessively profit-oriented. Koirala urged the government to improve the management of non-performing loans and provisioning regulations and to expedite the establishment process of Asset Management Companies.

Speaking at a program organized by the Economic Journalists’ Society, Koirala said, “The banking sector is highly regulated. We are managing deposits worth approximately NPR 8 trillion and operating a loan portfolio of around NPR 6.9 trillion.” He added, “However, considering the current economic circumstances, some policy flexibility is necessary.” Koirala emphasized the need to review the classification of non-performing assets and provisioning frameworks.

He called for improvements in the management of bad loans in a way that facilitates ease for both borrowers and banks. Additionally, he stressed the urgency of completing the establishment process of Asset Management Companies. Referring to the government’s budget provision setting a deadline to establish such a company by the upcoming Poush (December-January), he expressed confidence that this would substantially aid in addressing problematic loan management.