24th January 2025, Kathmandu
Devendra Raman Khanal, CEO of Rastriya Banijya Bank, spoke at the bank’s 60th Annual General Meeting on Thursday, highlighting recent signs of economic recovery in Nepal. Khanal acknowledged that while the banking sector faces challenges, such as rising non-performing loans (NPLs), there are positive developments in the broader economy.
Nepal Economic Recovery RBB CEO
Boost from Remittances and Liquidity
One of the key factors contributing to the economic improvement is the increase in remittances, which has enhanced liquidity in the banking sector. This boost in liquidity has led to lower interest rates, providing relief to businesses across Nepal. Khanal noted that the improvement in revenue collection and the efficient use of public resources were also supporting economic recovery.
Inflation Control and Policy Effectiveness
Khanal pointed out that the government’s effective use of fiscal and monetary tools has helped control inflation, creating a favorable environment for economic growth. He emphasized that these measures have played a crucial role in stabilizing the economy and supporting the ongoing recovery.
Challenges with Non-Performing Loans
Despite the positive trends, Khanal expressed concern about the increasing number of non-performing loans in the banking sector. He noted that this issue has caused significant strain on financial institutions, although the overall economic situation in Nepal remains more stable than the global economic outlook.
Government Reforms Fuel Optimism
Khanal credited the government’s recent policy reforms for fostering optimism about the future. These efforts, he said, have created a more conducive environment for businesses and banks to thrive.
Looking Ahead
Khanal expressed hope that the economic improvements would address issues like excess liquidity in banks and the declining loan-to-deposit ratio. He concluded by stating that the ongoing recovery would help resolve these challenges and strengthen Nepal’s economy in the long run.
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