No environment for investment despite fund

Chairperson of Confederation of Banks and Financial Institutions Nepal (CBFIN) Pawan Kumar Golyan said there was no investment-friendly environment in the country despite availability of liquidity in banks and financial institutions.

At a press conference organized by CBFIN in Lalitpur on Tuesday, Chairperson Golyan said the financial institutions were afraid of flowing new investment despite having adequate deposits in banks. "Banks and financial institutions' staff are not assured that loans invested in different sectors would be paid back".

He urged the media to raise the issue that it was wrong to create an environment for not to repay loan in an organized manner. "The interest rate charged for the productive sector should be lower than the interest rates for the unproductive sector".

"The fear of reducing the interest rate was to check the flight of money for purchasing luxurious goods. But, the banks and financial institutions received huge amounts of deposits due to higher interest rates. On the other hand, entrepreneurs are not in a position to bear the existing interest rates. Therefore, interest rates should be lowered", he noted.

There was an investment of Rs 200 billion in the small hydropower based energy sector from banks, he said, stressing the need to formulate policy taking into consideration the chance for leveraging economic prosperity.

CBFIN secretary Pushpa Sharan Mallik said the banks and financial institutions should discourage fixed deposits below one year so as to reduce interest rates. "There should be a low cost for reducing interest rates. So, it needs to discourage receiving fixed deposits for less than a year".

On the occasion, Golyan said the interest rates should be lowered effective from coming mid-April since the entrepreneurs are not able to pay back the interest rates of the loan and bear the burgeoning loan portfolio.