Higher interest rate: A setback for entrepreneurs

Chitwan –Banks increasing interest rates has affected entrepreneurs to expand their businesses. Banks have increased the interest rates on loans taken by the entrepreneurs against the past agreements, complained the entrepreneurs. 

Its impact is on production sector mostly. "I took Rs 400 million loan to open a hotel) at eight percent interest rate, but it has reached up to 13 percent now, forcing me to pay extra Rs 20 million a year," said Chitwan Chamber of Commerce and Industry President Bheshraj Duwadi. "Investing in the country at this point of time is like going bankrupt. Many entrepreneurs will go bankrupt if the banks' this move continues." 

Despite the government's progressive work in ending syndicate in many sectors, its lack of insights into capital market is affecting entrepreneurs, said Rajan Gautam, Vice President of Federation of Nepalese Chamber of Commerce and Industry of Province 3. Banks have shot up interest rate by almost double, thus affecting entrepreneurs, he added. 

Chamber of Commerce and Industry Chitwan President Sahan Lal Shrestha was of the view that the banks should have maintained the same interest rate as agreed during the contract period. Stating that the interest rate has increased by two folds, he argued that in the wake of such increment, the local industries had reached in the state where they could not operate. 

According to him, those willing to start enterprises are discouraged and the consumers are directly affected due to banks' cartel in interest rate. Many were willing to venture into productive sector and business following the formation of a stable government, but due to the current interest, they are discouraged. Many people have started opting for other banks as the interest rate continued to increase. 

Trilochan Kandel, who is also the Central Chairperson with Nepal Egg Producers Association, shared that he opted for another bank as the interest rate of the loan increased by 4 per cent. 

Poultry entrepreneur Kandel argued that many farmers were badly affected by the increase in interest rate as the majority of the farmers take loan from the bank to start the poultry enterprise. 

Prime Commercial Bank Bharatpur's Manager Padam Poudel admitted that the interest rate was increased owing to shortage of money in the bank suitable for investments and competition in the interest rate for deposit. 

He opined that the interest rate was rocketed due to demand for business loan and enterprises following the promulgation of the new constitution, untimely spending of the government expenses, increasing investment in the sectors which would pay back the loan in long time such as hydro power among others. 

Since the interest rates are higher, the locally produced produces have not been able to compete with the goods imported from the third countries. The entrepreneurs and would-be entrepreneurs have been

discouraged and eventually the consumers are directly affected as there would be inflation in the price of the goods with the increment of the interest rate in the business sector. 
---