KATHMANDU, FEB 14 - Commercial banks have not used a single penny of refinancing facility provided by the Nepal Rastra Bank (NRB) even during the acute liquidity crisis they are going through.

When the banks are accepting deposits from the institutional depositor and through inter-banking lending at interest rate as high as 14 percent, they have failed to use the already offered funds by the central bank at too minimum  interest rate.

NRB has provided the banks refinancing facility at 2 percent interest rate for exports of Nepali goods which they should finance to exporters at below five percent interest, according to monetary policy for the current fiscal year.

Likewise, NRB has also extended refinancing facility for sick industries that the commercial banks get at 1.5 percent and they should provide them below 4.5 percent interest rate. The central bank has said that it could refinance the sick industries up to Rs. 2 billion.

The banks get refinancing even for their lending for small and cottage industries at 2.5 percent which they should invest it at below 5.5 percent interest rate to the industries.

Acting NRB governor Krishna Bahadur Manandhar said that the banks failed to use any refinancing facilities provided through above different windows. “All the banks have been providing exports credit to some extent,” said Manandhar. “But, no bank has ever approached us to get already offered loans.”

He said that the central bank could provide loan as much as possible to banks.

Sashin Joshi, president of Nepal Bankers’ Association (NBA), said that banks were not taking refinancing as the process of getting loans from the central bank was complicated.

He however said that NBA was discussing with NRB even to get refinancing facilities for the lending in other sectors such as hydropower. “It has been necessary as liquidity crisis is continuing.” He said that the central bank was positive on the bankers’ proposal.

But, Manandhar made it clear that NRB wanted the banks to use the already opened refinancing windows before making any proposal. “We have been reminding them about refinancing options time and again.”

But, chief executive officer of Sunrise Bank Suman Neupane said that exporters were not requiring much financing facilities as most of them send goods abroad after getting advanced payment from the importers.

“In case of export-based industries, there are not high demands of credit as most of the industries have shut down,” he added.

Posted on: 2010-02-14 08:49

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