Kathmandu. The Confederation of Nepalese Industries (CNI) has protested against the decision of banks and financial institutions to increase interest rates on deposits. The decision by banks and financial institutions to raise interest rates indicates further risk to the economy, the confederation said in a statement.

The union also said that the current problem would not be solved as the increase in interest rates would increase liquidity in the market. The association understands that this will only lead to the transfer of deposits and increase the risk to financial stability. Its direct adverse effects are certain to be felt in industries, agriculture and tourism businesses which are facing problems due to various reasons including KOVID.

According to the association, rising interest rates will increase investment and market prices will also have a negative impact on consumers. In the current situation, the industry, which is mostly weak, seems to be weakening. Therefore, the confederation warmly urges all concerned to be vigilant to protect the financial system of the country.

The association is of the view that keeping the institutional deposits of large government-owned savers at the old interest rates will reduce the competition for raising interest rates in the market. In the current crisis, the central bank has also asked for some time to relax the regulatory ratio that commercial banks have to meet.

With the objective of stabilizing the interest rate and making it transparent, Nepal Rastra Bank has implemented the rule of publishing the interest rate for the coming month on a monthly basis. The confederation has requested the Nepal Rastra Bank to make arrangements to change the interest rate only every three months.