Global institutions including the World Bank and the International Monetary Fund (IMF) have expressed reservations at the recent directives of Nepal Rastra Bank (NRB) related to the spread rate and directed lending.
Releasing the Nepal Economic Update on Tuesday, the World Bank said that the combination of deprived and productive sector targets with the envisioned introduction of the cap on deposit-lending spread imply restrictions on banks’ room to manoeuvre through both prices and quantities.
Channelling large amounts of funding through deprived sector lending may discourage eligible micro finance institutions (MFIs) from developing products and targeting clients beyond ones specified by NRB policies. “This may result in a segment of the market not being served by MFIs,” it stated.
Aurelien Kruse, senior country economist of the World Bank for Nepal who made the presentation on the report on Tuesday, said that although the NRB measures were guided by good intentions, they pose a risk to the financial system and may not best serve the objective.
“Customers can decide whether to obtain service from certain banks based on their various charges and they should be made transparent.”
Remaining
Releasing the Nepal Economic Update on Tuesday, the World Bank said that the combination of deprived and productive sector targets with the envisioned introduction of the cap on deposit-lending spread imply restrictions on banks’ room to manoeuvre through both prices and quantities.
Channelling large amounts of funding through deprived sector lending may discourage eligible micro finance institutions (MFIs) from developing products and targeting clients beyond ones specified by NRB policies. “This may result in a segment of the market not being served by MFIs,” it stated.
Aurelien Kruse, senior country economist of the World Bank for Nepal who made the presentation on the report on Tuesday, said that although the NRB measures were guided by good intentions, they pose a risk to the financial system and may not best serve the objective.
“Customers can decide whether to obtain service from certain banks based on their various charges and they should be made transparent.”
Remaining
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