Liquidity Problem in Financial sector in Nepal

Recently the Financial sector has faced serious liquidity problem. The liquidity problem has started since fiscal year 2066/67, when the maiost government had taken the policy of showing the sources of fund when the amount deposited exceeds NPR1 million. Liquidity problem became more serious, when Central Bank(Nepal Rastra Bank) had banned to invest in real estate collateral and order to commercial bank to maintain 25% real estate loan of total loan exposure. After NRB policy against investment in real estate, financial institutions are facing more liquidity problem. Number Of land broker were in increasing trend before the NRB policy, people made the land broker job as main as well as side job. The price of land had been increasing sharply. Broker has become billionaires and millionaires in whole night. But in now a days the billionaires and millionaires land broker are listed in black list of financial institution. Some broker has changed their occupation and tries to find alternative work or business. The problem has been increasing due to lack of the government spending. The business man and Bankers has been demanding Government to announce the budget in proper time and address the current situation, which may help to prevent the country from economic default. For one -two years, the capital creation in the country has been very slow. The cash which has been withdrawn from one bank has not been deposited in another financial institution, which is serious problem for the financial institutions as well as whole economic system of the country. Number of financial institution has been increasing rapidly since last three years. So Central bank is unable to monitor and control the institution. Governor directly announced that the NRB has not sufficient number of human resource for monitoring purpose in different public program. The result of lack of monitoring in financial institution, Nepal Bikas Bank and Samjhana finance has been undergoing in liquidation process. Similarly, the bankers have lost economic norms and values of financial principles. The case of Gurkha development bank, united bikas bank, Nepal share markets and peoples finance are the hot examples of financial crimes by bankers. The case of those institution, made general public undecided choosing the good performing financial institution. Among the different large depository institution of the country, the militiary wealfear fund has started to withdraw money from some development bank and finance company. Similarly the central bank itself returns back his deposit amount, which had maintained in different institutions.