Finance Minister Rameshwor Prasad Khanal has said that the available liquidity should be mobilized in productive sectors and focus on building national capital. Addressing the 36th anniversary of CIT here today, Minister Khanal pointed out the need of investing in production-oriented sector as the interest rate has been reduced in the banking system and there is sufficient liquidity.

Stating that projects requiring big infrastructure and long-term investment should be forwarded, he said process has been forwarded to increase investment in projects like Budhigandaki Hydropower Project through public-private partnership (PPP) model. He also stressed on investing the idle capital in productive sectors.

Finance Minister Khanal said that the conflict seen in the Middle East region could affect Nepal’s supply chain and problems like price hike, and special attention should be paid in the coming days to resolve it.

“The balance of payment balance and current account are in surplus and the government revenue has also increased compared to the last fiscal year,” he said, adding, “Many economic indicators are improving.” Now is the time to create an environment where capital can reach the hands of investors. Pointing out the need of formulating laws related to alternative financial mobilization at the earliest, he stressed the need of reconsidering the tax being levied on various retirement funds.

Finance Minister Khanal stressed on the need of minimum tax on income of equal nature and social security. Stating that many government-owned institutions are facing problems, he said that CIT has been successful in achieving business success. He also said that an appropriate alternative should be sought on the basis of government’s policy guarantee regarding the recovery of loan issued by the fund in Nepal Airlines Corporation.

Stating that the fund should be cautious about risk management while investing, he said that it is necessary to issue long-term bonds for the management of assets and liabilities of various retirement funds.

On the occasion, CIT chairperson Tulasi Prasad Ghimire said the Fund was playing an important role for high and sustainable economic development. Stating that it was necessary to expand investment in productive and infrastructure sectors, he said the Fund has been successfully implementing various savings schemes. According to him, the Fund has been able to achieve professional progress due to the guidance of the regulatory body and the dedication of the employees.

Executive Director of CIT Parbat Kumar Karki underscored the need of diversifying CIT investment. He said the fund has been investing the collected amount in various sectors. Currently, about half of the fund is invested in banks and financial institutions in the form of fixed deposits, about 22 percent is invested in loans and loans and shares of various institutions.

According to him, almost half of the investment is in fixed deposits of banks and financial institutions and the fall in interest rates may affect the fund’s profit. He said that there is a risk of a decline in income if investment is not diversified.

Executive Director Karki pointed out the need to increase investment in the infrastructure and productive sectors which the government has prioritized. He also informed that the Fund has expanded its branch network in all provinces and increased the use of digital technology in service delivery.

He said the fund would be developed into an institution with sustainable returns by strengthening internal governance, transparent and up-to-date accounting system. He also said that the fund is being developed as an institution capable of investing in big projects.

Stating that there were some similarities in the works of the Citizen Investment Trust and the Social Security Fund, he stressed the need of clarity on the works. Stating that some Rs 22 billion has been invested in Nepal Airlines Corporation and some difficulties were seen in recovery of the amount, he said initiatives are being taken for the management of loan as the loan was released under the government’s guarantee.

On the occasion, Nepal Bankers’ Association president Santosh Koirala underscored the need for diversifying the fund’s investment for long-term and safe returns. He said that the Fund should not be limited to fixed deposits but also should expand its investment in various financial instruments including bonds.

He said that various instruments should be used to make the investment safe in the long term as interest rates sometimes increase and sometimes decrease. According to him, around Rs 77 trillion has been collected in deposits and around Rs 58 trillion in loans have been invested in the banking sector.

According to him, the expansion rate of the banking sector has been limited to around 3.9 percent in the current fiscal year. Chairman Koirala said that it has also been challenging to recover the loans issued by the banks in recent period.