FNCCI submits monetary policy recommendations to NRB, urges structural reforms

KATHMANDU: Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has submitted formal recommendations to Nepal Rastra Bank (NRB) for the monetary policy for fiscal year 2026/27. The proposals call for immediate structural reforms to revive the sluggish domestic economy.

The private sector body noted strong external indicators, including a 38.3% rise in foreign exchange reserves and a balance of payments surplus twice that of last year, but said internal demand remains weak. FNCCI highlighted that Rs 1.4 trillion of investable funds are idle in banks, while private sector credit growth has fallen from 7.3% to 5.7%.

FNCCI said the main constraint is not the current low interest rates but the limited capital capacity of commercial banks, many of which are nearing regulatory capital limits. The federation urged capital relief measures and realistic flexibility in provisioning to restore banks’ lending ability.

To improve credit flow, FNCCI proposed adjusting Working Capital Loan Guidelines to reflect industry-specific needs, setting the loan-to-sales ratio at 1.20, and reinstating limited overdraft facilities up to 20% of approved loans. It also recommended easing loan-loss provisioning by fixing a 0.75% provision for performing loans and introducing a more gradual provisioning scale for overdue accounts.

For the productive sector, FNCCI requested 1 percentage point interest concession for domestic manufacturing through lower risk premiums. It urged timely implementation of national budget measures, including establishing a National Asset Management Company by mid-January to handle non-performing assets, and permitting information technology firms to invest up to 25% of their export earnings abroad.

Other recommendations included lowering digital payment fees, enabling cross-border QR payments with India, raising the monthly card spending limit in India from Rs 100,000 to Rs 300,000, fast-tracking business-friendly cheque bounce legislation, and separating the legal treatment of businesses from that of individual business owners.