Industrialists threaten to stop repaying loansIndustrialists in this southern economic hub vented anger at high bank interest rates by declaring on Tuesday that they would not pay the monthly instalment if banks did not bring down the rates.
Industrialists in this southern economic hub vented anger at high bank interest rates by declaring on Tuesday that they would not pay the monthly instalment if banks did not bring down the rates.
Submitting a memorandum to the banks and financial institutions based in Bhairahawa, factory owners announced their third round of protests against the high interest rate on loans. Narayan Bhandari, president of the Rupandehi Chamber of Commerce and Industry, said they would intensify their protest if the banks did not slash interest rates.
The industrialists presented a memorandum of their demands to Agricultural Development Bank, Mission Development Bank, Shine Resunga Development Bank, Janata Bank, Nepal Bank Limited, Tinau Bikas Bank, Nepal Community Development Bank and Purnima Bikas Bank. According to Bhandari, they will present similar notices to the rest of the banks in the region by this weekend. There are more than 50 banks in Rupandehi district.
Industrialists have been accusing banks of unilaterally increasing interest rates on loans. Bhandari said they would stop paying their repayment instalments to the banks from next month if the interest rate was not reduced.
Industrialists have been demanding 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. The high interest rate has allowed banks and financial institutions to enjoy rising profits while domestic industries are being pushed to the verge of closure, according to the industrialists. Industries are considered crucial in generating employment opportunities and growing the national economy.
While the production sector has been hard hit by high interest rates, Nepal Rastra Bank said it was helpless to address the industrialists’ plea. As per the central bank, it is impossible to bring down the interest rate charged by banks and financial institutions on loans and advances as long as they stay within the spread rate.
Many banks revised the base rate recently. They said they could not slash the interest rate on loans as central bank regulations allow them to adjust the rates only on a quarterly basis.
Last month, industrialists in the eastern region upset by high interest rates charged by banks on loans announced launching a stern protest against the government and the central bank in February. 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 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.