The message given by the Finance Minister to the National Bank from the rostrum of the Parliament

July 7, Kathmandu. Standing in the rostrum of the House of Representatives on Monday, Finance Minister Janardan Sharma blamed the NRB for the continuous decline in the share market. It is a well-known fact that the monetary policy that came after the replacement bill was flawed. I want to clarify that some problems have arisen due to those errors, ‘he said.

Finance Minister Sharma made the allegation at a time when the stock market index has fallen by 1,200 points to below 2,000.

While the Nepal Rastra Bank is preparing the monetary policy, the Finance Minister has accused the Parliament of having the monetary policy of last year due to the market index coming down from 3200 to 2000.

NRB officials say the finance minister is pushing for a market-friendly monetary policy. “It’s a message or a warning,” said one official.

Finance Minister Sharma has repeatedly said that the monetary policy chief of NRB is responsible for the decline in the share market. He had called Governor Maha Prasad Adhikari on September 7 and said that he had drawn his attention to the issue.

At that time, the secretariat of the finance minister had issued a statement asking the governor to facilitate the capital market. The governor’s office said in a statement that it was “committed to making the situation easier by arranging the necessary procedures.”

NRB had made an arrangement that the same person could not take share loan of more than Rs. 40 million from the same bank and more than Rs. Such a limit has made a limited number of large investors uncomfortable. But some investors argue that this is the reason for the decline in the overall stock market.

The question has also arisen as to whether it is appropriate for the Finance Minister to give instructions to ‘fix the market problem’ from the rostrum of the Parliament. Former Governor of Nepal Rastra Bank, Dipendra Bahadur Chhetri, not only made a statement to the Finance Minister, but also remarked that pressure was put on NRB after the Prime Minister had asked the Governor to ‘listen to the problems of investors’.

Officials of the Nepal Capital Market Investors Association had met Prime Minister Sher Bahadur Deuba on June 7 and demanded to change the limit of Rs 40 million and Rs 120 million.

After meeting the Prime Minister, the union had put forward a four-point demand.

The union also demanded that the credit-resource ratio (CCD ratio) be abolished and the loan-to-deposit ratio (CD ratio) be restored.

Similarly, the association had demanded to give broker license to the banks for the expansion of share market in all the states and districts. According to the association’s president Radha Pokhrel, during the meeting, the prime minister had called the governor and asked him to listen to the complaints of the investors.

She had written on social media, “Officials of the Capital Market Investors Association will come to Nepal Rastra Bank tomorrow. The condition of the investors has become serious. Please address them immediately.”

Governor Adhikari met the investors the next day. “Monetary policy will be shaped by the state of the economy,” says Chhetri, a former governor.

Stating that the share market is declining due to rising interest rates due to lack of liquidity, he said that the NRB may have introduced share market policies to increase production and increase investment in the sector of job creation.

The former governor sees regional economies still demanding tighter monetary policy. He said that the NRB should take the necessary policy despite the pressure.

According to him, investors should have the ability to hold even when the market declines, but there is a tendency to sell out after seeing a loss. “Even if the borrowed investment goes into deficit, it may not be able to withstand,” he says.

Former Governor Chhetri said that the market would be predictable if investment was made for long-term return. “Everyone should understand that the current state of the economy is not favorable,” he said. “Investors should also exercise restraint.”

Former Executive Director of NRB, Trilochan Pangeni, says that the Finance Minister should not shy away from blaming NRB for the problems seen in the capital market. Stating that the policies of the government should not create frustration, he said that the NRB and the Ministry of Finance should come to a conclusion through internal discussions. “When the market declines, no one makes a profit. “Everyone has to work to create a market environment that is conducive to the growth of the economy,” says Pangeni.

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