Print Edition - 2014-08-22 | MONEY
NRB told to hear complaints against interest rate hike
Aug 21, 2014-
The Supreme Court on Thursday directed the Nepal Rastra Bank to form a mechanism to hear public complaints against the hike in interest rate on loans of banks and financial institutions.
Issuing a final verdict on a petition filed by Advocate Lal Bahadur Basnet, a three-member bench led by Justice Kalyan Shrestha issued the order. Petitioner Basnet had demanded an order in the name of the central bank asking it to ensure the financial institutions comply with the original agreements signed with the party.
He has called for banks not to increase the lending rate to an extent whereby
the borrowers are not in a position to pay the loan and eventually have their collateral auctioned.
Basnet claimed banks, against the contract signed with the party, increase the lending rate often in a year itself. Petitioner charges the financial institutions of maintaining huge spread rate or gap in interest rate of lending and deposit.
“But on the other hand they don’t even return the deposit amount to the concerned party citing liquidity crunch,” read the petition.
Petitioner Basnet also takes a swipe at the central bank for delegating its right to increase the lending rates to the financial institutions citing the creation of conducive and competitive environment for the banks.
He calls for scrapping of the provision arguing the central bank or the governor don’t have the right to delegate such authority.
Defendants in the petition include Office of the Prime Minister, Ministry of Finance and then Secretary Krishna Hari Banskota, NRB and Governor Yubraj Khatiwada, Ministry of Agriculture and Cooperative Department.
Published: 22-08-2014 09:32