PM orders Finance Ministry to check high interest ratesPrime Minister KP Sharma Oli on Saturday directed the Finance Ministry to sort out the issue of high interest rates charged by banks on loans within three days.
Prime Minister KP Sharma Oli on Saturday directed the Finance Ministry to sort out the issue of high interest rates charged by banks on loans within three days.
PM Oli made this remark while meeting a delegation from the private sector at the Prime Minister’s residence in Baluwatar.
The issue of high interest rates has been a common grievance among industrialists across the country, who say that the high interest rates have been adversely affecting the business sector for nearly two years.
The private sector has also been demanding the government to end the uniformity in insurance premium rate. They said that the insurance premium should not be the same for all sectors and it should be different based on the nature of the business.
“The prime minister has directed the Finance Ministry to address the grievances faced by the private sector within next three days,” said Bhim Ghimire, president of Chamber of Industries, Morang. “We made a detailed presentation on how banks and the insurance companies are making higher profits and how domestic industries are on the verge of closure due to high interest rates,” Ghimire said.
“We clearly highlighted to the prime minister that the existing business model of banks and financial institutions and insurance companies are that of a ‘cartel’,” he said. “The PM immediately ordered the Finance Ministry to intervene on the matter.”
The PM has also directed the Ministry to make necessary arrangements to disburse loans at the production and agriculture sectors at cheaper rates.
A separate meeting is expected to be held on Monday, which will be led by Finance Minister Yuba Raj Khatiwada.
Industrialists in the eastern and western regions have been protesting against the government and the central bank over the high lending rates.
Last Tuesday, industrialists in Bhairahawa, the southern economic hub, vented anger at high bank interest rates by declaring that they would not pay the monthly instalment if banks did not bring down the rates.
Industrialists in the eastern region 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.
Saturday’s meeting with the prime minister was led by Chamber of Industries, Morang and Morang Merchants’ Association that included representatives from Federation of Nepalese Chambers of Commerce and Industry, Confederation of Nepalese Industries and Nepal Chamber of Commerce.
Industrialists have been claiming that they take loans at 6 percent interest, but within a few months, the banks increase it to 16 percent.
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.