Chamber Urges NRB to Put Growth and Private Sector Confidence at the Centre of Monetary Policy

Kathmandu — The Nepal Chamber of Commerce has urged Nepal Rastra Bank to bring a monetary policy that supports investment, production and private sector recovery at a time when business confidence remains weak.

A delegation led by Chamber President Kamlesh Kumar Agrawal met Nepal Rastra Bank Governor Dr. Bishwo Nath Poudel and submitted a set of suggestions for the upcoming monetary policy.

The Chamber said the economy has remained sluggish for the past five years, with industry, trade, construction, tourism and services failing to gain expected momentum. It argued that the next monetary policy should not remain limited to price stability but should actively support economic expansion.

One of the Chamber’s key demands is stronger credit growth. It has suggested that the central bank create conditions for credit expansion of more than 20 percent if the country is to achieve economic growth of around 7 percent.

The interpretation is clear: the private sector wants the central bank to move from a defensive monetary stance to a more growth-supportive approach. Businesses believe weak credit demand and tight financial conditions have slowed investment and employment creation.

The Chamber has also demanded that single-digit interest rates be made a stable policy objective. It has proposed reducing the bank rate to 5 percent and limiting the spread rate of banks and financial institutions to 3.5 percent.

For businesses, the cost of borrowing remains one of the most important concerns. High interest rates increase production costs, reduce investment appetite and make it difficult for firms to expand operations.

The Chamber has also called for the immediate removal of the Working Capital Loan Guidelines 2078. It said the current arrangement has made it difficult for businesses to access working capital according to their actual operating needs.

Working capital has become a sensitive issue for traders and industries. Many businesses argue that their cash cycle differs from sector to sector and that a uniform lending rule does not properly reflect market realities.

The Chamber has also raised concerns over anti-money laundering rules. It said the existing legal and enforcement framework has created unnecessary fear among genuine businesspeople who have legally earned assets.

It has urged the authorities to take a practical approach toward assets earned before 2064 BS, arguing that formal documentation and record-keeping systems were not strong during that period.

This demand reflects a broader concern among businesses that strict compliance rules, if applied without historical context, may discourage capital from entering the formal economy.

The Chamber has also sought reform in the Know Your Customer process. It said KYC requirements are repetitive, time-consuming and different from one bank to another.

It has proposed an integrated digital KYC system under which a customer who has completed KYC in one bank would not be required to repeat the same process in every other bank.

Such a system, if implemented properly, could reduce administrative delays, lower compliance costs and improve customer experience in the banking sector.

The Chamber has also asked the central bank to make banking forms and documents more uniform. Businesses say lack of standardisation has made banking procedures unnecessarily complicated.

Another major demand is relief for borrowers who are unable to pay loan instalments and interest on time. The Chamber has suggested that such borrowers should not be immediately blacklisted.

Instead, it has recommended loan rescheduling and restructuring based on the nature of the business and the reason behind repayment difficulty.

This proposal is especially relevant for sectors that have been hit by weak demand, delayed payments and low market activity. Immediate blacklisting may push struggling but viable businesses into deeper crisis.

The Chamber has given special focus to the housing and real estate sector. It has asked the central bank to allow restructuring and rescheduling of real estate loans and raise the loan-to-value ratio to 80 percent.

The real estate sector has strong links with construction materials, cement, steel, furniture, labour and financial services. A revival in this sector could therefore have wider economic effects.

However, a more relaxed real estate policy also carries risk. If credit expansion is not matched by real demand and repayment capacity, it could again create asset-price pressure and banking risk.

The Chamber has also asked NRB to review strict credit-to-income ratio rules. It says such rules should be made more practical so that genuine borrowers are not denied credit unnecessarily.

It has further proposed that the liability of a personal guarantor should be limited to the person’s share ownership in the concerned company.

This demand is linked to the principle of limited liability. The Chamber has argued that the banking system should respect the legal separation between a company and its individual shareholders.

It has also suggested that if one company is blacklisted, transactions of other related companies should not be automatically blocked unless there is a clear legal basis.

The Chamber has asked the central bank to regulate banking service charges and make banking procedures simpler, more digital and customer-friendly.

It has also called for an end to unnecessary administrative and police intervention in cash transactions. According to the Chamber, such intervention discourages formal business activity and creates fear among traders.

The Chamber has proposed increasing the limit for cash deposits in banks and creating policy incentives to bring money from the informal economy into the formal banking system.

This suggestion points to a major policy challenge. Nepal needs stronger formalisation of economic activity, but excessive compliance pressure can push some transactions further outside the banking channel.

The Chamber has also requested policy measures to attract foreign investment, promote exports and improve access to finance for productive sectors.

It has suggested banking facilities of up to 80 percent for electric vehicles, easier use of higher-denomination Indian currency for Indian tourists, and productive use of part of the foreign exchange reserves to support economic activity.

These proposals show that the Chamber is asking for a broader monetary policy package, not just lower interest rates. Its demands cover credit growth, regulatory reform, tourism, exports, real estate, digital banking, foreign investment and informal capital formalisation.

During the meeting, Chamber President Agrawal said the monetary policy should be designed to restore private sector confidence. He said economic recovery would remain difficult unless businesses feel encouraged to invest and expand.

He also praised recent reform efforts made by Governor Poudel and expressed confidence that the upcoming monetary policy would address the concerns of the private sector.

In response, Governor Poudel said Nepal Rastra Bank was committed to economic growth, investment expansion and private sector development. He said the central bank was working to reduce unnecessary compliance burdens through financial policy and regulatory reforms.

The governor also said genuine suggestions from the private sector would be addressed as far as possible through the monetary policy and related financial arrangements.

The meeting reflects growing pressure on the central bank to make the next monetary policy more supportive of business recovery. The private sector wants easier credit, lower borrowing costs, simpler compliance and more flexibility for struggling borrowers.

At the same time, NRB will have to balance these demands with financial stability, inflation control and banking sector risk management.

The challenge for the central bank will be to support growth without encouraging careless lending. If credit is expanded without proper appraisal, it could increase bad loans. But if policy remains too tight, investment and business confidence may remain weak.

The Chamber’s submission therefore highlights the central policy dilemma facing Nepal’s monetary authority: how to revive economic activity while keeping the financial system safe.

Overall, the Chamber’s recommendations indicate that the private sector expects the upcoming monetary policy to act as a recovery tool. Whether NRB accepts these demands fully or partially will shape the business environment in the next fiscal year.