Nepal Rastra Bank Governor Dr. Bishwanath Poudel has said that rising bad loans in agriculture and small and medium enterprises have adversely affected banks and financial institutions.

He said that introducing monetary policy focusing only on large entrepreneurs and businesses will not solve this problem. At a pre-monetary policy discussion program organized by the Society of Economic Journalists (SEJON), Governor Poudel mentioned that preparations are underway to introduce monetary policy for the upcoming fiscal year 2082/83 focusing on agriculture and small and medium enterprises. “We want to increase the flow of credit to the agriculture and small and medium enterprises sectors, but bad loans have increased. We should focus more on how to solve this problem,” Governor Poudel said. “In times of instability, all sectors are affected; therefore, we need to uplift everyone as much as possible instead of having one group of the rich and another group of farmers and small entrepreneurs.”

Senior Vice President of the Confederation of Banks and Financial Institutions (CBFIN) Nepal, Rajesh Upadhyay, said that the main reason for the inability to increase credit despite the reduction in interest rates is the decline in disposable income. “Our expenses have increased, but income has not increased; youth migration has reduced consumption in the consumer market,” Upadhyay said. He argued that although there is a need for guidelines for working capital loans, it has not come at the right time. Upadhyay expressed the view that the increase in bad loans is not just a problem for banks but has emerged as a social issue.

Former Chief Secretary Dr. Baikuntha Aryal said that the government has always brought expansionary fiscal policies, but the private sector is facing additional problems due to the lack of policy stability. He claimed that the government has brought reform-oriented and expansionary fiscal policies such as broadening the tax base, but we do not have policy stability.

Similarly, former president of the federation, Shekhar Golchha, said that it is necessary to boost the morale of the private sector through the upcoming monetary policy.
Nepal Bankers Association President Santosh Koirala stressed the need to establish asset management companies as powerful and authorized institutions. “Currently, banks are acting as asset management companies; when banks alone cannot solve the problem, we need a powerful institution to act as asset management companies,” he remarked.