Even as banking collapses seem to be spreading from the US to Europe, Nepal Bankers Association has limited interest rates on loans effective this week. The move is aimed at protecting customers from high interest rates, and make taking loans more affordable. The premium rate on loans has been reduced to 5%, the interest rate on fixed deposits is at 11%, and 8% on ordinary saving accounts. Institutional and remittance accounts are set at 9% and 12% respectively. Interest rate of deposits less than one year will be 11.50%.
Nepal Rastra Bank has kept several rates unchanged to protect its tighter monetary policy including the cash reserve ratio which remains unchanged at 4% and statutory liquidity ratio remains at 12%.

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Business

Reduced interest rate

Nepal’s foreign currency reserves increased in the first seven months of the current fiscal year mainly due to the rise in the remittance earnings and cutbacks on luxury import items.
Foreign labour permits increased by 57.3%, increasing remittance earnings by 27.1% to Rs689.88 billion against a drop of 4.4% in the same period last year. Nepal Rastra Bank (NRB) reports that the country’s gross foreign exchange reserve grew to $10.50billion in mid-February 2023 from $9.54 billion in mid-June 2022. Reserves held by banks and financial institutions except NRB decreased 2.5% to Rs155.28 billion. Merchandise imports decreased 19.9% to Rs919.16 billion and imports from India, China and other countries dropped by 18%, 24.3% and 22% respectively. FDI remained at Rs1.04 billion in the review period. The current account deficit is still Rs29.64 billion.

Forex reserve increase

The year-on-year consumer price inflation remained at 7.88% in mid-February as compared to 6.24% in the same period last year. Food and beverage inflation stood at 6.19% whereas non-food and service inflation increased to 9.22%. The price index of restaurants and hotels increased by 15.24%, cereal grain by 12.39%, tobacco products by 10.83%, alcoholic drinks by 8.78% and spices by 8.04%. Transportation was up by 15.58%, health by 10.39%, housing and utilities by 9.78%. Kathmandu recorded the highest inflation rate increase at 8.47%. The consumer price inflation remained at 7.82% for Tarai, 7.30% for Hill and 7.92% for Mountain regions. The government’s goal is to limit inflation at below 7% this fiscal year.

Consumer price inflation

The Ministry of Agriculture has increased the price of chemical fertilisers by cutting the subsidy rate. Urea is a hefty 78% more expensive and will now cost Rs25/kg, up from Rs14. Subsidised diammonium phosphate (DAP) will now cost Rs 50/kg and potash Rs40/kg.
The average chemical fertiliser subsidy is at 59.04%. The ministry cited USD appreciation, and said the savings from subsidy would allow more fertilizer import to meet growing demand which currently stands at 520,000 tonnes annually.

Fertiliser price hike

The Turkish Airlines Bowling Tournament is being held for the first time in Nepal on 19 March. Competing agencies include Empire Travels and Tours, Roaming Nepal Travels and Tours, Smart Holidays, Flight Connection International Travels, Bon Travels and Tours, Sumegh Travels, among others. The bowling tournament was first held in 2012 to bring together the airline's business partners from all over the world. The grand finale will take place in Istanbul on 5 -- 7 May and the champion will win a flight ticket and a vacation in Antalya.

Turkish bowling

Senior Vice President of Federation of Nepalese Chamber of Commerce and Industry (FNCCI) Chandra Dhakal announced policy changes in the private sector to improve the economy. He said businesses were discussing with the Nepal Rastra Bank and the government regarding interest rates and the need for all three levels of government to be private sector-friendly.

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Economic policy change

Tata motors concluded its ‘Electrifying Exchange 2023’ event on Tuesday. During the event, customers were offered an opportunity to exchange their petrol and diesel vehicles for Tata EVs. Some 200 vehicles were evaluated during the three-day event. Customers were also offered test drives and detailed information about battery powered cars.

Tata exchange

Laxmi Group is organising a weeklong free service camp for Isuzu customers. Vehicle owners can register early for special discounts on minor and major repairs, lubricants, spare parts and gift hampers. The camp also includes a training program for drivers and free inspections till 18 March.

SML ISUZU service

Sipradi Tradings has launched Exide Xplore motorcycle batteries which come with spill proof design, gas recombination system, high charging capacity and a 48-month warranty.

Exide Xplore

High fuel costs and concerns about air safety have dampened growth of Nepal’s domestic aviation sector despite passenger demand remaining high. Prominent media coverage of the crash of Yeti691 in Pokhara on 15 January led to massive cancellations just as bookings were being firmed up for the spring trekking season. For one month, passenger volume dropped sharply, but is now picking up again.&nbsp; Pokhara still wears a deserted look, and tourist footfalls have fallen along popular trails in Manang and Annapurna. Even so, Nepal’s biggest domestic airline <a href="https://www.buddhaair.com/">Buddha Air</a> is making Pokhara’s newly opened international airport its new hub for cross-sector flights.&nbsp; From 9 March it is basing five planes in its all-ATR fleet of 14 aircraft in <a href="https://www.nepalitimes.com/here-now/pokhara-will-be-a-game-changer/">Pokhara</a> for daily early morning departures to Bhadrapur, Bharatpur, Simara, Bhairawa, Nepalganj and Kathmandu. Pokhara airport will also be opened for night flights this week. The <a href="https://www.nepalitimes.com/latest/nepals-airlines-fly-high-despite-turbulence/">robust passenger demand</a> is due to the poor condition of the main highways to Pokhara from Kathmandu and Bhairawa which makes air travel attractive despite high fares. Another contributing factor is <a href="https://www.nepalitimes.com/business/buddha-air-spurt-in-domestic-flights/">domestic tourism</a>, as more and more young Nepalis discover their own country. “Pokhara is a game-changer,” says Buddha Air’s Managing Director Birendra Bahadur Basnet. “We are excited about Pokhara becoming our secondary hub.” Basnet’s optimism comes despite considerable headwinds from high price of Aviation Turbine Fuel (ATF) which is now Rs170/l, more expensive cost of operations because of the strong dollar vis-a-vis the Nepali rupee, as well as difficulties in sourcing aircraft components because of continued global supply chain constraints.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230308060352_2ef1b95693b96d37b796c61291f360abd7d6e8e35b7fafaeadd754ddab2f578b.jpg" data-media-id="editor_4" data-image-id="20230308060352_2ef1b95693b96d37b796c61291f360abd7d6e8e35b7fafaeadd754ddab2f578b" data-rendition-name="original" width="960" height="640" loading="lazy" alt="Birendra Basnet"> </figure>  Added to this is air traffic congestion at Kathmandu airport, which forces planes to burn fuel on extended holding queues for landing. Buddha Air's business plan appears to focus on diversifying its operations base, pioneering new domestic inter-city routes and expanding connections to north Indian cities beyond its current thrice-weekly Kathmandu-Varanasi flights.&nbsp; The new Bhadrapur-Pokhara route, for example, hopes to tap Indian tourists from Sikkim, Darjeeling and Assam, while allowing Nepalis to fly to Indian destinations via Bagdogra bypassing Kathmandu. In anticipation of increased demand on the new routes, Buddha Air is adding two ATR-72-500s, bringing its total fleet strength to 16. “We do not have to look too far for tourists in Nepal, there is the huge Indian market right next door, we just have to make flight connections more convenient,” says Basnet. Buddha Air has been lobbying to start flights from Pokhara directly to Varanasi, Lucknow and Delhi, but the Indian authorities have raised strategic objections to Pokhara Airport being built built by the Chinese under the Belt Road Initiative (BRI) — similar to India refusing to buying electricity from hydropower plants built by Chinese contractors.&nbsp; India has also refused to allow inbound flights to Kathmandu, Pokhara and Bhairawa via routes B345 from the south and L626 from the west. Both routes are open only for outbound international flights. This means longer flight time and fares from Bhairawa and Pokhara to Indian airports.&nbsp; Even so, Basnet says the Indian side is positive about connecting Janakpur to Ayodhya, and Nepalganj to Delhi. Existing flights from Pokhara to border cities in Nepal will increase Indian pilgrim and tourist traffic, as well as give access to cheaper domestic flights within India for Nepalis via Bagdogra, Darbhanga, Faizabad or Gorakhpur. Buddha has been trying to counter the negative international publicity following the &nbsp;Pokhara crash by highlighting <a href="https://www.nepalitimes.com/business/taking-air-safety-seriously-in-nepal/">air safety</a> and focusing on crew training and <a href="https://www.buddhaair.com/safety">strict safety protocols</a>. It is the only domestic airline with its own fully-equipped maintenance hangar with FSTD simulators to train and check its 141 pilots. Basnet told Nepali Times, “We are concentrated minutely on safety in all departments, specially flight operations, maintenance and ground handling department.”