The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) on Tuesday urged the Nepal Rastra Bank (NRB) to address the soaring interest rate on loans issued to the commercial sector by the banks.

In a meeting with NRB Governor Chiranjibi Nepal, the umbrella organisation of private sectors slammed the banks for abruptly raising interest rates.

“The banks have increased interest rates without considering the loan repayment capacity of the debtors, which will directly affect the cost of the ongoing projects while hitting hard the projects that are on pipeline” reads FNCCI in its press statement.

FNCCI has also expressed its concern on the slow progress of the government in spending the capital expenditure.

Reducing the spread rate to 3 percent from existing 4.5 percent, downsizing the threshold deposit collection from institutional depositors to 25 percent from 45 percent of the total deposit amount and initiating for a strong mechanism to bring in the cash flow of the informal economy into the formal system were among the demands of the private sector.

Currently, firms intending to take bank loan of Rs500 million and above have to receive credit rating from concerned agency. For the purpose, these firms have to pay the commission charge of 0.1 percent.

FNCCI has also urged the central bank to raise the threshold to Rs1 billion along with reduction in the commission fee. The umbrella organisation also demanded for the promotion of e-commerce and waiving the customs duty on the goods imported from Tibet if the payment is made through letter of credit, TT or bank drafts.

Source: The Kathmandu Post