Kathmandu. Commercial banks are facing problems due to the tightening of loan loss provisioning by the Rastra Bank. Banks are facing difficulties when they have to allocate a large amount of profit in provision.
According to the data released by the Rastra Bank, the total loan loss provision allocated by 20 commercial banks for loan loss has reached Rs 254.41 billion by mid-March of the current fiscal year.
Commercial banks have urged the Rastra Bank to bring flexibility in the loan loss provision period.
According to the current policy, banks should keep provision of 5 percent in two months, 25 percent in three months, 50 percent in six months and 100 percent in one year according to the classification of loans. However, the banks have demanded to bring flexibility in the period by amending the period.
Newly appointed Governor Bishwanath Poudel had summoned the CHIEF Executive Officers (CEOs) of all banks and financial institutions of A B and D category on June 15 and discussed about the upcoming monetary policy for three hours.
During the debate, the CEOs of commercial banks urged the governor to be flexible regarding the time period of loan loss provision.
One of the CEOs who participated in the discussion told Singha Durbar, “We are following the most difficult rule in the world on loan loss provisioning, neighboring country India has a very easy provision regarding provisioning, so we have asked the Rastra Bank to revise the provisioning.” ”
According to the CEO, the mortgage on loans given by Nepali banks bears more burden of loans. Therefore, rastra bank should change the time table in provisioning, the CEO said.
Due to the huge amount of money stuck in the provisioning of the banks, there is an unusual change in the bank’s profits. In some years, it will reach 15 to 40 percent and in some years, there is a situation where the profit cannot be given.
According to the proposal of the banks, there should now be a provision of 25 percent provisioning in six months, 50 percent in one year and 100 percent in two years.
Provisioning of which bank
Kumari Bank has allocated the highest amount of money for loan loss provision till Mid-April. The bank has set aside Rs 26.45 billion for loan loss provision.
Similarly, Nepal Bank has allocated Rs 11.27 billion, Rastriya Banijya Bank Rs 13.80 billion, Nabil Bank Rs 20.19 billion, Nepal Investment Mega Bank Rs 22.22 billion and Standard Chartered Bank Rs 2.32 billion.
Similarly, Himalayan Bank has rs 19.61 billion, Nepal SBI Bank Rs 5.26 billion, Everest Bank Rs 3.72 billion, NIC Asia Bank Rs 12.74 billion, Machhapuchhre Bank Rs 6.12 billion and Laxmi Sunrise Bank Rs 15.48 billion.
According to the nrb data, Siddhartha Bank has rs 8.23 billion, Agriculture Development Bank Rs 10.15 billion, Global IME Bank Rs 2.83 billion, Citizens Bank Rs 8.66 billion, Prime Commercial Bank Rs 12.55 billion, NMB Bank Rs 9.49 billion. Prabhu Bank has set aside Rs 18.90 billion and Sanima Bank Rs 6.31 billion for loan loss provision.
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