Kathmandu. Kathmandu: Banks and financial institutions have given various suggestions to the Nepal Rastra Bank (NRB) for the monetary policy for the upcoming fiscal year. It’s one of the things that happens every year.

Banks and financial institutions have demanded that the Rastra Bank should suspend the provision of ‘counter cyclical buffer’ for a few years while bringing the monetary policy for the next fiscal year and amend the provision of loan loss.

Financial institutions have suggested to postpone the ‘counter cyclical buffer’ arrangement made by the Rastra Bank in the monetary policy of the upcoming fiscal year 2082/83 for some time. According to the ‘Capital Adeukacy Framework-2015’, commercial banks have to implement the ‘Capital Cyclical Buffer’ from the financial year 2080/81. Cibifin has demanded that the system be stopped for a few years.

Similarly, banks and financial institutions have also demanded to reduce the risk burden on collateral loans of different nature. The finance institutions have also demanded to amend the existing loan loss provision of banks. According to the provisions of Nepal Rastra Bank( NRB), there is a provision in the loan loss classification to count the loans that have not exceeded the amount and have been deducted for one month as good loans. For this, banks will have to allocate only 1 percent of the loan loss amount. There is a demand from the financial institutions to revise it to 0.25 percent.

There is a provision to keep a close watch on loans that have crossed the contract for one month to three months. For this, banks and financial institutions have to allocate up to 5 percent loan loss. It has been demanded to reduce it to 2 percent. There is a provision to classify the loan that has exceeded the limit for three months to six months into low loans and for such loans, there is a provision to lose up to 25 percent of the loan. Sibifin has also demanded that it be revised to 10 per cent. Cibifin has also demanded that 25 per cent of the loans exceeding one year to two years should be provided for loss and such loans should be counted as substandard loans.

According to the provisions of the Rastra Bank, there is a provision to count the loan of one year as bad loan. For this, banks will have to provide up to 100 percent loan loss. It has demanded that loans above three years of age should be classified as bad loans. Nepal Rastra Bank (NRB) has demanded that the ‘A’, ‘B’ and ‘C’ category banks and financial institutions should provide at least 5.0 percent of their total loan amount (including purchase of bills and discount) and loans to the poor.

“Microfinance institutions can fix the interest rate from their customers up to a maximum of 15 per cent. According to the arrangement made by the Rastra Bank, the interest rate will be applicable to the loans that are outstanding on the date of issuance of this directive and the loans disbursed thereafter. Banks and financial institutions have also demanded to amend this provision.

They have demanded that the provision of loan disbursement with only one-third of the total loan should be abolished and the provision of taking a maximum interest rate of 15 percent should be amended and the provision of providing loan at base rate plus premium should be implemented and additional arrangements should be made so that microfinance financial institutions can collect deposits from the general public by making mandatory arrangements for security in the deposit and credit protection fund.

Similarly, they have also demanded the removal of the cap of Rs 150 million imposed on share mortgage loans (margin nature loans). At present, the maximum single customer loan limit has been fixed at Rs 150 million for loans of margin nature to be disbursed from one or all licensed entities. It has been demanded to abolish this provision.

Similarly, it has also been demanded to amend the existing provision regarding personal residential home loan. At present, ‘Sub-point No. While calculating the limit pursuant to clause (c) of Section 4, personal residential home loans of Rs 20 million or less should not be included. There is a provision of the Rastra Bank. They have demanded that personal residential home loans of Rs 50 million or less should not be included in the calculation of the limit as per the provision.

It has also demanded to amend the provision related to real estate and real estate loans. It has been demanded that the ratio between the existing real estate loan and its collateral security should be kept at a maximum of 50 percent and the provision should be changed to 60 percent. However, in the case of private residential home loans and loans provided by the Government of Nepal approved by the Government of Nepal for the construction of residential houses, such a ratio can be maintained up to a maximum of 60 percent and 70 percent.

At present, the loan value to value ratio can be maintained up to 70 percent in the residential home loan up to Rs 20 million provided to the person buying or constructing a house for the first time by the Rastra Bank, subject to the following conditions. There is also a demand to amend this provision to 80 percent. They have also demanded scrapping of the provisions relating to CS, CP, RP and 2 in the credit cell purchase-reproches and takeover arrangements.

They have demanded that the provision of 100 percent loan loss should be made due to the bad category of the loan of the Rastra Bank and the process of auction sale of mortgage security should be completed in accordance with the prevailing act and policy for loan repayment. ।

Similarly, bankers have also demanded that banks and financial institutions be allowed to close their branches. In order to reduce the abnormal growth of passive loans seen in banks and financial institutions due to the current slowdown in the economy and the increasing operating costs, the licensed institutions have demanded the prior approval of this bank to close or transfer or merge such branches or any kind of office if proposed with suitable concrete reasons.

Similarly, banks and financial institutions have demanded scrapping of the provision related to service charges made by the Rastra Bank. Nepal Rastra Bank (NRB) has banned any bank and financial institution from acting as an insurance agent. Such organizations have also demanded that the provision be scrapped in the Rastra Bank. They have demanded that banks and financial institutions should be allowed to work as institutional insurance agents in collaboration with insurance companies. Banks and financial institutions have demanded to increase the provision of agriculture, energy and small and medium loans (up to Rs 20 million) to Rs 100 million.

The institutions have also informed that there is a need to amend some things through the monetary policy of the Rastra Bank regarding the inter-rate of interest rate.