Business community continues protest against high interest rate

Umbrella organisations of industrialists and traders have been struggling for a conducive environment for the business in Nepal for months. They argue that interest rate has been a big burden that obstructs economic activities hitting much on business community.

The community has been drawing attention of the Government authorities and Nepal Rastra Bank, the central bank mainly. The commercial banks float loans for industries, trades and even individual purpose like, education, real estate, vehicle at affordable rates agreed by the borrowers but later and suddenly just send message of rise of interest rate.

The business – industries and trades have been at the slow motion and could not get fully back to normal form yet from coronavirus pandemic situation. Thus raised interest rate add more to their pains. This trend cannot support any business to exist, leading the country’s economy to a tragic end sooner.   

Representatives of the business community were set to stage a protest at the main gate of Nepal Rastra Bank, Baluwatar on Monday. But they were stopped on the way around a kilometre to go. They were displaying written slogans against the commercial banks’ policies on interest and the federal government to interfere against the interest rules through NRB to create conducive environment.

Business community leaders Anjan Bahadur Shrestha, Dinesh Lal Shrestha and others addressed the gathering demanding immediate government actions and commercial banks to cooperate. They also urged the solidarity of the community.

What will happen if the contradiction goes longer is a question to be answered and also what will be effect to the business community and commoners ?

Observers opine that possibly, the business system will collapse as the debtors fail to pay interest and capital on the loans. That will lead to supplies to the commoners first. Price of consumer products and services will be hiked in respect to the interest rate and profit margin authorised by the government laws. Ultimately the rate of inflation may go beyond a tolerance.

To check the interest rate and possible consequences the Federal Government need to support business community by subsidising the rate of interest and force banks to stay at minimum spread rate. Thus, a whole review on the monetary system may be a need and to introduce a conducive fiscal measures for the national economy to recover its ‘healthiness.