Kathmandu. The Banking Sector Reform Task Force has suggested that the bank should do 9 things to make the country’s economy dynamic. The task force has concluded that the economy could be boosted through the banking sector, prioritizing policy flexibility, loan expansion, coordination with the private sector and protection of interest of depositors.

According to the task force, it is necessary to adopt flexibility in the policy and regulation necessary to revive the sluggish economy without compromising on the interest of depositors. The task force has suggested that the policy of providing discount in certain areas while maintaining risk management is necessary as the flow of credit has been affected due to the current stringent policy situation.

The task force has pointed out that the Nepal Rastra Bank should take responsibility for the remaining government grants under the concessional loan program. It has been suggested that these programs should be brought into operation immediately by making arrangements for reimbursement from the bank’s dividend. This is expected to provide relief to small and medium enterprises.

After COVID-19, many businesses have closed or are operating in limited capacity. In such a situation, the entrepreneurs who want to resume business or expand scale should be provided additional loan facilities on the basis of business feasibility and collateral, the task force said. It is believed that this will help in creating jobs and increasing production.

The task force has also suggested restructuring and rescheduling of loans keeping the interests of depositors paramount. While providing relief to businesses facing temporary problems, caution should be taken so as not to increase long-term risk in the banking system.

The task force has suggested that business loans up to Rs 5 lakh in rural areas and up to Rs 1 million in urban areas should be made available from banks and financial institutions on the basis of appropriate collateral. It is expected to promote small businesses and self-employment.

Similarly, the committee has suggested increasing the limit of group loan and collateral-based entrepreneurial loan issued by microfinance institutions. The task force has also stressed on the need to adopt a special loan policy to attract youths to IT and startup business.

The task force has concluded that the blacklist rules should be reviewed and improved to remove obstacles seen in the flow of credit and develop an effective coordination mechanism with the private sector to strengthen the relationship between the banking sector and the economy.

The implementation of the recommendations of the task force is expected to accelerate economic activities through the banking sector and revive the overall economy.