With the introduction of its Monetary Policy for 2018-19 in June, Nepal Rastra Bank intended to address the shortage of loanable funds and maintain financial stability, while focusing on production and infrastructure sector. With one-fourth of the year already gone, Nepali Times spoke with Govinda Gurung, CEO of Civil Bank about the outcomes so far.
Nepali Times: How has the new Monetary Policy fared?
Govinda Gurung: Federalism, political stability and the Monetary Policy for 2017/18 have brought opportunities for the banking sector, strengthening its risk management capacity and creating business opportunities. The policies allowed the banks to move ahead aggressively with service and expansion, which in turn led to increase in capital collection and profit. However, compared to capital, the boundary for business has not improved because of which there are challenges in maintaining balance between GDP and the capital.
Banks these days seem to be marketing auto and home loans a lot?
The analytical parameters to issue loans for automation and homes are very few and easy to conduct. The process includes verification of income source and few papers. So it is easy for us to market it.
What about education loans?
In countries like the US, the government has fixed a certain amount of salary for a graduate from a particular university. Even though salaries vary, it is all verified by the certificate. So banks do not have to go into detail before issuing a loan. Here, we have been issuing loans based on the parent’s income, which we know is not the exact process.