Industrialists in the eastern region upset by high interest rates charged by banks on loans have announced launching a stern protest against the government and the central bank. The protest programme revealed by factory owners based in the Morang Industrial Corridor includes actions ranging from picketing the regional office of Nepal Rastra Bank to handing over the keys to their plants to the prime minister. 

The business people on Sunday submitted a memorandum to the government through the District Administration Office, Morang and the regional office of the central bank demanding that the government take immediate action to slash the exorbitant interest rates charged by banks and financial institutions. 

The disgruntled entrepreneurs plan to stage a sit-in outside the gate of the central bank office in Biratnagar on February 3 and shut down their factories and hand over the keys to the prime minister through the District Administration Office on February 7. They have warned that they will padlock the regional office of the central bank on February 7. 

Industrialists have demanded that the interest rate on loans extended to productive industries should not exceed 7 percent while the rate on commercial loans shouldn’t be higher than 9 percent. Pawan Kumar Sarda, president of the Morang Merchants’ Association, told the Post that the government must control the ever rising interest rate on loans and advances to businesses. “The interest rate on loans has increased significantly,” said Sarda. “We took loans at 6 percent interest. But, within a few months, the banks have raised it up to 16 percent which is unsustainable.”    

While banks and financial institutions are seeing rising profits, domestic industries are on the verge of closure due to high interest rates, according to Sarda. “If the central bank or the government fails to curb the increasing interest rate, we have no option but to close our factories,” he said. 

Sarda also lashed out at Nepal Rastra Bank accusing it of favouring banks and financial institutions at the cost of domestic industries that are crucial in generating employment opportunities and growing the national economy. “The indifferent attitude of the central bank is hurting domestic industry,” he said. 

The central bank said it was in no position to cut interest rates right away. “We can’t take immediate action to bring down the interest rate, but we will monitor the situation closely,” Nepal Rastra Bank Executive Director Narayan Prasad Poudel told the Post. 

“If we find any bank operating above the spread rate set by the central bank, we will take immediate action against it. But if they are operating within the spread rate set by the regulator, we can’t take any action.” As per Nepal Rastra Bank regulations, the interest rate spread of commercial banks must not exceed 5 percent.