FNCCI calls for monetary policy to prioritise investment, capital mobilisation

KATHMANDU: Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged the Finance Committee of the House of Representatives to prioritise the investment climate and capital mobilisation in monetary policy for upcoming fiscal year 2026/27.

Presenting FNCCI recommendations at a committee meeting at Singha Durbar, FNCCI President Anjan Shrestha said the domestic economy remains sluggish despite strong external indicators and that monetary policy must restore private sector confidence.

Shrestha noted that foreign exchange reserves have risen by 38.3% and now cover imports of goods and services for 19.2 months, while the balance of payments shows a surplus of Rs 863 billion. He stated that demand for credit has contracted: more than Rs 1.4 trillion of investable funds has accumulated in the banking system, yet credit flow to the private sector has fallen from 7.3% to 5.7%.

“The main problem at present is not the decrease in interest rates, but rather the limited capacity of banks to disburse credit. Since the core capital ratio of many banks has reached the lower limit, Nepal Rastra Bank (NRB) should adopt flexibility in capital adequacy and provisioning arrangements,” Shrestha said.

The FNCCI proposed measures on non-performing asset (NPA) management, working capital lending, credit restructuring and classification, concessions for the manufacturing sector, and improvements to digital banking and payments to help mobilise capital and revive investment.