Monetary Policy Should Focus on Liquidity, Interest Rates, and Credit Flow: Dr. Min Bahadur Shrestha
Author
Nepse Trading

Former Vice Chairman of the National Planning Commission, Dr. Min Bahadur Shrestha, has suggested that the upcoming monetary policy should be focused on liquidity management, interest rate stability, and credit flow.
Speaking at a discussion on monetary policy organized by the Finance Committee under the House of Representatives, he argued that interest rates should not be reduced unnecessarily. “If the Cash Reserve Ratio (CRR) is increased by 1 percentage point, banks will have more capacity to lend,” said Shrestha. “To achieve the target of 6% economic growth, credit flow toward the private sector must be expanded.”
He recommended that credit should be directed more toward productive sectors and industries that create employment. For this, he emphasized the need to open up new bank licenses and allow banks to operate more independently.
Shrestha highlighted that financial resources are currently concentrated within a few large groups in the banking system and stressed the need to analyze the causes behind the high balance of payments surplus. He criticized Nepal Rastra Bank for failing to assess whether the NPR 600 billion loan disbursed during the COVID-19 pandemic was effectively utilized.
While acknowledging that the central bank has been effective in certain policy areas, he pointed out its weakness in regulatory functions and emphasized the need for institutional reforms.