Kathmandu, March 5
The Kathmandu metropolitan city has withdrawn Rs 8.51 billion that it had kept in a fixed deposit account and another call account at Nabil Bank to transfer it to the central bank’s current account.
Rs 1 billion was in the fixed deposit account whereas Rs 7.51 billion was in the call account.
Of late, the municipal government was criticised for earning interests by keeping its money, also including the development budget, into the fixed deposit account whereas the Nabil Bank was providing the interest at a lower 5.5 per cent rate.
Nabil Bank had requested the local government to withdraw the money in instalments to finish it by mid-July, but the city had rejected it.
“We have decided to withdraw the money after concluding it was wrong to keep the money of the consolidated fund in the fixed deposit account.”
Stakeholders and economists have commended the decision. Former Finance Secretary Shanta Raj Subedi says the local government should spend its money in the consolidated fund by enacting an Appropriation Bill only as per the constitution’s article 219.
If such a practice was not corrected, there could be a risk that other local units would also follow that, he fears.