Nepal Rastra Bank Governor Dr. Biswo Paudel has said that Nepal’s banks and financial institutions have plenty of money, but very few good places to invest it.
During a meeting with the Nepal Economic Journalists Association (NAFIZ) on Wednesday, he said that even though the financial system has sufficient liquidity, the lack of investment opportunities has become a major problem.
Money without direction
Dr. Paudel explained that the problem has shifted in the past, the challenge was not having enough money, but now the challenge is having too much money with nowhere to invest. According to him, almost all sectors are moving slowly, and there is no strong enthusiasm in any particular field.
He added that investor confidence has weakened, which is why the deposits sitting in banks are not turning into investments. Although various sectors are open for business, people are hesitant to take risks or start new ventures.
Investors losing confidence
The governor recalled that in the past, investors actively put money into banks, insurance, airlines, telecom, schools, hospitals, and real estate. But now, those areas have nearly stopped attracting new investment.
He also mentioned that with the halt of plot trading, the real estate market has gone quiet, and private sectors face too many restrictions. “Earlier, people used to line up for licenses to start new ventures. Now, confidence is missing,” he said.
Bigger budget, same problem
Dr. Paudel pointed out that even though Nepal’s national budget has grown massively from around Rs 1 trillion two decades ago to nearly Rs 18–19 trillion now the real economic situation has not improved much.
He further stated that several recent economic challenges have hurt banks’ balance sheets. According to him, banks are struggling to improve their financial statements in the first quarter of the current fiscal year, and there is little sign of quick recovery.
