By A Staff Reporter
Kathmandu, Nov. 10: Governor of the Nepal Rastra Bank, Maha Prasad Adhikari suggested the banks and financial institutions (BFIs) to look for the long-term profits rather than immediate unusual profits.
Reminding their mediatory role at the annual function of Nepal Bankers’ Association (NBA), he said that the BFIs must not charge exorbitant fees for their services. “The central bank was forced to make interventions in some BFIs as they crossed the institutional discipline. Problem in even a single institution might create problem in the entire financial system,” he said.
According to him, while the NRB was working to discourage the unhealthy competition in the banking and financial sector, lack of field supervision during the COVID-19 pandemic has resulted in the violation of discipline in some BFIs.

Governor Adhikari also directed the BFIs to restrain themselves from aggressive credit mobilisation and invest in the sectors that support the economic growth. Growth of the banking sector should match the growth in the economy. Interest rate stability helps in the economic growth, he said.
Due to high demand of loan in the aftermath of the COVID-19 pandemic and the BFIs’ aggressive credit mobilisation, the financial system is now facing liquidity crisis. Meanwhile, loan recovery is also delayed due to the extension of repayment date by six months to support in the rehabilitation of the businesses affected by the pandemic.

Speaking at the programme, former Vice Chairman of the National Planning Commission Dr. Shankar Sharma questioned the central bank about its attempt in micro-management of the BFIs.
Saying that the Board of Directors of the NRB should not be dominated by government representatives, he urged for the revision in the provision.
According to him, the central bank should also create policy provision in the areas of risk based supervision and digital banking.

Newly elected president of the NBA Anil Upadhyaya said that the association would take initiatives to make the banking sector healthy and competitive.
According to him, the commercial banks have 88 per cent share in total deposits and 89 per cent in loan mobilisation. “Therefore, we have a great responsibility to make the system stable. Fear of failure during the COVID-19 period had threatened the BFIs and economy equally. All sectors should put a joint efforts to raise from this disaster,” he said.