Government Holds High-Level Talks with Private Sector and Banks to Restore Business Confidence

Kathmandu: The government has started a fresh dialogue with private sector representatives, bankers, and senior officials of Nepal Rastra Bank (NRB) in an effort to improve investor confidence and revive economic activities. The discussion focused on the current economic situation, challenges in the banking sector, and possible policy measures to make the business environment more supportive.

The meeting, organized by the Prime Minister’s Secretariat, brought together representatives from major private sector organizations, commercial banks, and the central bank. The participants discussed ways to reduce the gap between businesses and financial institutions and identify practical solutions to ongoing economic challenges.

Private sector representatives raised concerns over several regulatory provisions that they believe have affected investment sentiment. Representatives from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI), and Nepal Chamber of Commerce argued that strict banking regulations and risk management measures have made it difficult for businesses to access credit.

During the discussion, business leaders particularly pointed to issues related to loan loss provisioning requirements, share market lending restrictions, real estate sector financing, loan-to-value (LTV) ratios, and debt-to-income (DTI) provisions. They argued that although monetary policy has become relatively supportive, regulatory barriers continue to limit private sector expansion.

Private sector representatives suggested that certain provisions related to loans for the stock market and real estate should be reviewed to improve investment confidence. They maintained that without stronger private sector activity, economic growth and employment generation would remain under pressure.

Bankers, however, defended existing lending procedures, saying that requirements for documentation and verification are not intended to create unnecessary hurdles but are necessary obligations under existing laws and regulatory standards. They highlighted that customer identification, know-your-customer (KYC) procedures, and collateral verification are essential parts of responsible banking practices.

Bankers suggested introducing a centralized KYC system linked with the national identity card system to reduce repeated paperwork for customers. They argued that such a system would simplify banking services, reduce administrative costs, and make loan processing more efficient.

Financial institutions also raised concerns over legal complications during collateral management. Issues related to property division, consent requirements from family members, and other legal procedures were discussed as areas requiring clearer regulations to reduce uncertainty in lending activities.

Representatives from Nepal Rastra Bank responded positively to the concerns raised by both businesses and banks. The central bank indicated that it would continue discussions with stakeholders and consider necessary policy flexibility to support economic recovery while maintaining financial stability.

The discussion reflects the government’s attempt to rebuild trust between the private sector and financial institutions at a time when credit growth has slowed and excess liquidity has accumulated in the banking system. Despite lower interest rates and sufficient liquidity, weak loan demand has remained a major challenge for economic recovery.

The Prime Minister’s Secretariat said the government is committed to improving private sector confidence and addressing difficulties faced by businesses and banks. Officials indicated that a working group may be formed to study the issues in detail and recommend practical solutions.

Economists view the dialogue as an important step because Nepal’s current economic challenge is not only related to liquidity availability but also to confidence among investors and entrepreneurs. If regulatory concerns are addressed while maintaining banking discipline, it could encourage new investment and help increase economic activity.

The meeting was attended by officials including the Prime Minister’s Private Secretary Suman Sharma, lawmaker Bidushi Rana, NRB Deputy Governor Ramu Paudel and Executive Director Dirgha Bahadur Rawal. Private sector representatives and senior banking executives also participated in the discussion, marking a rare joint platform between policymakers, businesses, and financial institutions.