Kathmandu, December 17
An industrialist from Birgunj went to a bank to ask for a loan to expand another plant in the flour industry. The branch chief asked him to give a loan of Rs 50 million for the expansion of the industry.
One is to raise Rs 50 million from any source before starting the loan process and the second is to take the loan in installments.
The industrialist says, “Something can be done on the condition that the loan can be disbursed in installments at the rate of Rs 5 million.” Instead, I will stop the loan process now. I will not be able to look for deposits for banks and move forward with half-baked installment loans," says the industrialist.
Chairman of the Birgunj Chamber of Commerce and Industry Subodh Kumar Gupta said that it was impossible to raise investment for opening new industries and expanding the existing industries. Stating that there is lack of funds for investment on the one hand and accumulation of money in the state coffers on the other hand, he claims that the problem is due to the government and NRB. “Every year, there is a tendency to raise interest rates and create obstacles to the expansion of investment by showing liquidity on the pretext of lack of capital expenditure,” Gupta said.
“Bharatraj Acharya, chairman of the industry committee under the Federation of Nepali
Chambers of Commerce and Industry (FNCCI)”.
The operator of a resort under construction in Pokhara reached the bank this week to take a loan. The bank, which had earlier given a loan at 8 percent interest rate, said that this time it could only give a loan at 12 percent interest rate. “Something can be arranged at 12 percent, if not less than that,” said the resort operator. He is worried about how to raise money after the bank demanded high interest
rates.
According to Gokarna Karki, vice-president of the Pokhara Chamber of Commerce and Industry, complaints are coming every day that the flow of credit has been stopped due to liquidity and interest has been offered more. He says the lack of credit is seen as a crisis, even as industries and businesses are moving, after the Corona epidemic subsided. “We are being pressured by liquidity,” said Karki. There are a lot of industrialists who come with complaints that they have not received any loan since the message that 12 percent interest has been received on the loan given at 8 percent earlier.
A businessman from Birgunj recounts his experience of passing a loan from a bank using the power of an official of Nepal Rastra Bank.”Somehow, even though we did not get the required amount through NRB officials, some loans have been made available,” said the trader.
Lack of sufficient funds to lend to banks has also affected the development of industry and business. The number of industrialists and traders complaining that they have not received any loan for setting up a new industry or increasing the capacity of the old business and for operating capital has increased.
Chairman of the Nepal Cement Producers Association and industrialist Dhrubaraj Thapa says that the banks are reluctant to give loans that have already been approved.
“Deposits are low, even the loans approved by the banks have to be shifted for a few days,” he said.
Bharat Raj Acharya, chairman of the industry committee under the Federation of Nepali Chambers of Commerce and Industry (FNCCI), said that the industrial sector was in the throes of a liquidity crisis and was heading towards a deeper crisis.
He said that there were serious problems in the industries that had suffered losses during the Corona epidemic due to liquidity crisis, revival of business, establishment of new industries and import of raw materials required for the industry. He said that the industries that have moved ahead and are in the process of growth will not be able to get loans.
Acharya says that he has received a complaint from the federation that he is not getting loan even for the running expenses of the running industry. Chairman Acharya said that there was a complaint that the banks had proposed to delay the LC for a few days as the big industries had opened LCs for importing raw materials for industrial purposes.
‘It’s a temporary problem, no panic’
Central Bank spokesperson Dr. Gunakhar Bhatt claims that the liquidity problem is temporary. Stating that the finance minister has taken initiative to increase capital expenditure, he said that the positive results will be seen in the market.
“There is a problem, but it is temporary. The private sector should not be alarmed as the government has worked to increase capital expenditure and banks are also tightening loans to non-essential sectors, ”said Bhatta. Stating that there are signs of increasing remittances and capital expenditure these days, he claimed that the liquidity problem would be resolved soon.
Bhuvan Dahal, the outgoing chairman of the Nepal Bankers’ Association and the chief executive officer of Sanima Development Bank, says that it is justified not to get loan during the liquidity crisis. However, he claims that in the last four months, about four trillion rupees of debt has flowed.
“There is a liquidity crisis. It is true that banks are unable to disburse loans for the time being, but there is no need to panic because of loans disbursed in the past,” Dahal said. Stating that the amount to be spent in the government’s coffers is Rs 2.5 trillion, Dahal said that the liquidity crisis will be resolved.
(Karuna Thapa)
