रोशनी तामाङ
Kathmandu. Commercial banks have made public the raw financial statements for the second quarter of the current fiscal year. According to the statement, the consolidated net profit of the banks is Rs 27.43 billion 69 million. Which is 4.62 percent less than the previous fiscal year 2080/081.
In the same period of the previous fiscal year, the banks had earned a net profit of Rs 28.76 billion 52 million. Out of the 20 commercial banks, the net profit of 9 banks has decreased while the profit of 11 banks has increased.
According to the financial statements made public by the banks, in the current fiscal year, Nabil Bank has succeeded in increasing its profit by 1.29 percent, Global IME Bank by 49.51 percent, Nepal Investment Mega Bank by 57.18 percent, Everest Bank by 21.11 percent, and NMB Bank by 45.61 percent compared to the previous fiscal year.
## Similarly, in the second quarter, the net profit of Himalayan Bank increased by 0.98 percent, Prabhu Bank by 85.49 percent, Sanima Bank by 4.72 percent, Laxmi Sunrise Bank by 9.71 percent, Nepal SBI Bank by 7.11 percent, Machhapuchhre Bank by 0.24 percent, while NIC Asia Bank’s profit decreased by 92.03 percent, Kumari Bank by 68.20 percent, Nepal Bank by 21.87 percent, Siddhartha Bank by 53.36 percent, and Citizens Bank by 15.45 percent.
Similarly, the net profit of Rastriya Banijya Bank has declined by 62.14 percent, that of Krishi Bikas Bank by 29.35 percent, that of Standard Chartered Bank by 4.97 percent, and that of Prime Commercial Bank by 14.34 percent.
Distributable profit of banks is 26 billion, 6 banks are still ‘negative’
Out of 20 commercial banks, 14 banks have increased their distributable profit in the second quarter of the current fiscal year, while the distributable profit of 6 banks is negative.
The distributable profit of 6 commercial banks is 11.65 billion rupees, while the distributable profit of the 14 banks that increased is 26.43 billion rupees. Compared to the same period of the previous fiscal year, the average distributable profit is negative by 3.79 billion.
The distributable profit decreased in Kumari Bank, Himalayan Bank, Citizens Bank, Laxmi Sunrise Bank, Machhapuchhre Bank and Siddhartha Bank, while the distributable profit increased in Prabhu Bank, Krishi Bikas Bank, Nepal Bank, Rastriya Banijya Bank, Everest Bank, Global IME Bank, Nabil Bank, NIMB Bank, Nepal SBI Bank, NIC Asia Bank, NMB Bank, Prime Commercial Bank, Sanima Bank and Standard Chartered Bank, according to the data.
This is the situation of bad loans
According to the financial statements made public by the banks, the bad loans of most banks have increased. Out of the 20 commercial banks, only Everest Bank has decreased its bad loans.
The average bad loans of banks are 4.49 percent, which is 1.09 percent more than the same period last year. In the same period last fiscal year, such an average was 3.39 percent. With the average bad loans of banks being 4.49, the NBA and NPA of the bank have also continuously increased.
Similarly, the earnings per share of banks has fallen to 14.71 percent, while the return on equity (ROI) has been limited to 7.73 percent, according to the data. Recently, there have been signs that recovery stress in banks is increasing.
According to Santosh Koirala, President of the Nepal Bankers Association (NBA), there are signs that recovery stress may increase further as security threats have started to be faced by employees to collect loans given by banks. Banks are still not able to collect loans from borrowers.
Commenting on bad loans, Governor of the National Bank of Nepal Mahaprasad Adhikari said, ‘The pressure that is currently facing banks is the pressure of NPAs. As a result, they have had to make excessive provisions. This is due to the continuous increase in NPAs for the past 2 years, adding billions to the provisions. This is the effect of that.’
The bad loans of banks are increasing, which makes it clear that banks are still lagging behind in loan recovery. The National Bank has set certain limits and laws on bad loans for banks. After exceeding that limit, the National Bank itself has declared the bank problematic and stopped taking additional deposits and credit flow.
Since the minimum capital fund ratio specified by the National Bank has not been maintained, and the non-performing loan ratio has reached 40.85 percent, the National Bank has declared Karnali Development Bank problematic on Push 10 and has taken control of the management of the bank. Karnali Development Bank has been declared a troubled institution in accordance with Section 86B of the Nepal Rastra Bank Act, 2058 BS.
After the Nepal Rastra Bank declared Karnali Development Bank troubled on Poush 10, fear has increased among the investors and depositors of the development bank. However, although this situation is seen in the commercial banks, the Nepal Rastra Bank has explained that this situation will not occur in commercial banks.
Regarding the problems of the banks, the Governor of the Nepal Rastra Bank has claimed that there will be no problem for any depositor of the banks and financial institutions regulated by the Nepal Rastra Bank.
The problem that started with cooperatives has gradually spread to the development banks. If commercial banks are unable to achieve success in loan recovery, it seems that commercial banks will also be burdened by bad loans.
In development banks, bad loans have started to take a serious form. According to the latest data released by the National Bank, the bad loans of Narayani Development Bank have reached 43.69 percent. The National Bank has also taken action against Narayani, which has a bad and fragile financial condition, several times.
Similarly, among development banks, Saptakoshi Development Bank has 11.42 percent, Sindhu Bikas Bank has 9.06 percent, Excel Development Bank has 8.56 percent, Corporate Bikas Bank has 7.53 percent and Garima Bikas Bank has 4.72 percent bad loans.
Among commercial banks, Kumari Bank’s bad loan ratio has remained at 6.96 percent. In the same period last year, this bank’s bad loan ratio was 4.97 percent.
Bankers are accused of hiding bad loans. Economist Nar Bahadur Thapa says that no one knows about the bad loans of Nepali banks.
He says, ‘There are hardly any banks and financial institutions with single-digit bad loans. This means that the National Bank has reduced the bad loans of banks and financial institutions by facilitating reporting.’
What is the bad loan ratio in Nepal? Thapa says that Nepal Rastra Bank and banks themselves do not know. Thapa, who is also the former executive director of Nepal Rastra Bank, said, ‘Neither the National Bank nor the banks themselves know what the bad loan ratio, non-performing loan ratio, and NPL are in Nepal. No one knows this. This is just an estimate that is coming out.’
Former executive director Thapa claims that now it is the turn of banks to explode. ‘Cooperative microfinance has exploded, now it is the turn of banks. Now the banking sector is in a state of stagnation. It is in a state of impasse. There is a problem. It is not being able to escape from that problem.’
#Debtor defrauds banks, #Billions of rupees not repaid
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## In the first six months of the current fiscal year, banks have registered cases against debtors in the Debt Recovery Tribunal after they were unable to collect loans worth billions of rupees. So far, 833 cases have been registered in the Debt Recovery Tribunal, while 664 cases are yet to be decided.
According to the Tribunal’s Information Officer Devendra Dhakal, banks register cases against borrowers only when they do not repay the loan on time.
‘When borrowers take a loan, there is a bilateral agreement in the offer letter that the interest will increase and decrease according to the bank’s rules after taking a loan at this interest rate. When they take money, they close their eyes and put a cap on it and later the interest increases. The borrowers do not go beyond the rules written in the offer letter. After the borrowers do not repay the loan on time, a penalty is imposed,’ he said.
The process of registering cases in the Tribunal is increasing day by day. Banks are under stress as they are unable to recover billions of rupees from borrowers.
Nepal Bankers Association (NBA) President Santosh Koirala has complained that borrowers are not honest with banks. He says that even though the relationship between banks and borrowers is like that of flesh and blood, when the loans given to borrowers with trust and confidence are not repaid on time, they have to face betrayal from the borrowers.
Banks have the last option ‘#Auction#’#’
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## Banks start the auction process after they are unable to collect loans. The local level is delaying in recommending the way home for the auction process, which is affecting bank recovery, bankers say. Recently, banks have also been publishing information about the auction of borrowers’ collateral.
The International Monetary Fund is pressuring the Nepal Rastra Bank to conduct a loan quality review and loan portfolio review. Nepal Rastra Bank had selected India’s KPMG Assurance and Consulting Services LPP company to audit the 10 largest banks. The Rastra Bank had canceled the agreement with the company, saying that the company demanded a large amount of money during the agreement phase.
According to Rastra Bank sources, a budget of about Rs 50 million has been allocated to audit the 10 largest banks. The previous process was canceled after the Indian audit firm refused to work within that scope. With the cancellation of the previous process, the Rastra Bank has re-launched the process to audit the commercial banks.
Top 10 Commercial Banks in Loan Portfolio Review
The International Monetary Fund’s audit quality review and loan portfolio review currently include the banks with the highest number of bad loans in the list of 10.
The banks under the audit of international audit firms are Nabil Bank, NIC Asia Bank, Kumari Bank, Nepal Investment Mega Bank, and Himalayan Bank, respectively.
Similarly, foreign audit firms will audit Prabhu Bank, Global IME Bank, Lakshmi Sunrise Bank, NMB Bank and Rastriya Banijya Bank.
Bankers are complaining that banks are not able to collect the amount given to manufacturing and contract leasing.
Currently, most bank CEOs are saying that there is a problem with loans given to direct sectors such as agriculture, hydro, and tourism. There is a provision that banks should adopt the concept of direct lending and lend at least 10 percent to the energy sector and 15 percent to agriculture.
Finance Minister Bishnu Prasad Poudel has been calling banks the backbone of the economy. He said that the economy has been under pressure due to various crises in banks and the economic slowdown in the country in recent times. But he says that some aspects of the economy have improved now.
He said, “Banks are the backbone of the economy. Although the economy has been under pressure for some time now, some aspects of the economy as a whole are looking positive. The stock of foreign currency is good. The balance and payment situation is favorable. Bank interest rates are decreasing. Bank liquidity is in a comfortable position. Remittances are increasing. Inflation and price increases are within control.”
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