The Nepal Rastra Bank (NRB) is reviewing the monetary policy without major changes to address the issue related to excess liquidity in the banking system.
As the central bank prepares to make public mid-term review of the policy, officials insist that the NRB was not worried about the current status of liquidity in the market“ “
“Once the lending grows in productive sectors, the situation of excess liquidity will ease. In fact, it has already stare”, said a senior NRB official. "As long as remittance flows at large scale, there will be excess liquidity.”
The banking system currently has around Rs 50 billion in excess liquidity and the NRB has been issuing reverse repo in order to absorb that from the market. However, the bankers are expecting at least some measures to check on the excess liquidity that has reduced the interest rate. “The issue of liquid fund has been the biggest concern at the moment. It has affected both depositors and lender”, said Upendra Poudel, vice-chairman of Nepal Bankers’ Association.
The bankers are also expecting a revision of the existing spread rate? fixed by the central bank at 5 percent for this fiscal year.?
source:the kathmandu post,3 march 2014
LINK
As the central bank prepares to make public mid-term review of the policy, officials insist that the NRB was not worried about the current status of liquidity in the market“ “
“Once the lending grows in productive sectors, the situation of excess liquidity will ease. In fact, it has already stare”, said a senior NRB official. "As long as remittance flows at large scale, there will be excess liquidity.”
The banking system currently has around Rs 50 billion in excess liquidity and the NRB has been issuing reverse repo in order to absorb that from the market. However, the bankers are expecting at least some measures to check on the excess liquidity that has reduced the interest rate. “The issue of liquid fund has been the biggest concern at the moment. It has affected both depositors and lender”, said Upendra Poudel, vice-chairman of Nepal Bankers’ Association.
The bankers are also expecting a revision of the existing spread rate? fixed by the central bank at 5 percent for this fiscal year.?
source:the kathmandu post,3 march 2014
LINK
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