According to Adhikari, it is wrong to say that economic activities declined due to the increase in interest rates. "This is not the first time that the interest rates have reached this level," he said, "In the past, the deposit interest rate was up to 13 percent, but people did not demand to low the interest rate. Why is there such a demand now?"
Adhikari assured that the banking system in the country is safe and will not be shaken by smaller shocks. The capital adequacy ratio of banks and financial institutions is above 13 percent. "This is the strong side of Nepali banks," he said. However, the governor cautioned that the non-performing loans will increase slightly in the coming days. "The 'evergreening' of loans has been stopped and bad loans may increase due to problems in the real sector, Adhikari said, "But it will not affect the stability of our financial system." The central bank has said that the external sector of the economy has improved a lot compared to last year. Major indicators such as the current account balance, foreign exchange reserves, and remittances have shown promising signs over the last couple of months. According to Adhikari, a high-level study committee has been formed to resolve the problems of the microfinance sector. "Further decisions will be taken on the basis of the report submitted by the committee," he said.
