रोशनी तामाङ
Kathmandu. Bad loans are becoming a headache for the CEOs of commercial banks. Bankers who were happy with mortgages until a few years ago are under pressure from all sides after mortgage auctions stopped.
The National Bank has set a target of 12 percent credit expansion this year. But only 5 percent credit expansion has been achieved in the first six months of the current year. Santosh Koirala, President of the Nepal Bankers Association, has said that the biggest problem now is in recovery. Speaking at an interaction program on contemporary issues in the banking sector organized by the Economic Media Society Nepal, Chairman Koirala said that there is no alternative to recovery.
As liquidity in banks increases and they are rapidly increasing loans by finding new customers, bankers are focusing all their efforts on loan recovery, saying that they are unable to recover old loans. As the relationship between banks and borrowers deteriorates, the National Bank is going to act as a bridge.
Narendra Bank Governor Mahaprasad Adhikari has said that the job of banks is not only to disburse loans. Governor Adhikari has said that it is also the duty of bankers to save the businesses of businessmen. Governor Adhikari has said that the National Bank is drafting a law to prevent good borrowers from being blacklisted easily.
Governor Adhikari has said that the law on blacklisting borrowers will be amended. Speaking at a program, he said that the tendency to blacklist borrowers as soon as they get into trouble will have a negative impact on the country’s business and said that homework is being done to amend the law on blacklisting.
He said, “Work is being done to formulate laws from the monetary policy itself for the problems within the banking system. The work of drafting laws is being done from within the National Bank. The task force within the National Bank is doing that work. We have said that the main problem of recovery in the banking sector is to formulate laws from the monetary policy itself. After that, it will be easy to move bad loans to another pocket. Full recovery is not possible. We are making a law for asset management companies. We are drafting it. The problem of recovery is intertwined with the slow-down economy. As this improves, the recovery of the bank will also improve.”
Governor Adhikari has said that banks should not blacklist borrowers because they are technically weak.
He added, “A customer is a person who has been an entrepreneur for 40 to 50 years. If he is blacklisted on the basis of his technical weakness, everything will be closed. He has been operating his business for so many years by taking loans from the bank. Due to the impact on the economy and the weakness in his financial planning, he may be forced to exit the business. At such times, the banker has an important role. No, my job is not to give loans. Here, businessmen do not work according to a plan. There are those who do the work after getting the job. If the banks provide a little counseling, that borrower can survive.”
According to a NRB source, the blacklisting system maintained by the Credit Information Center will be slightly modified in the second quarter review. But the NRB has made it clear that such a system will work only for good borrowers.
The center has been blacklisting borrowers on the request of banks. There is a provision that banks can register cases and go through the blacklisting process as per the law only if borrowers who have taken loans of Rs 1 million or more from banks and financial institutions do not repay the loan on time.
Under what circumstances do borrowers fall on the blacklist ?
Banks have given loans to borrowers by specifying certain terms. Banks initiate proceedings against borrowers in cases where the terms and conditions mentioned in the bilateral agreement between the bank and the borrower are violated at the time of taking the loan.
In these cases, the blacklisting process
- If the loan principal or interest payment date exceeds 1 year
- If the borrower goes missing or is not contacted for 90 days
- In the event that a licensed institution files a complaint against a borrower with the Debt Recovery Tribunal
- In the event that the institution fails to provide additional security or personal guarantee when requested by the institution after the loan has been exceeded
- In the event that a borrower knowingly provides false information regarding the collateral or business
- In the event that the collateral related to the loan is found to have been embezzled
- According to the prevailing law, if the debtor becomes insolvent
- In the event that a licensed institution files a case against the debtor in court.
If banks and financial institutions have to register a case against any debtor or include it in the blacklist, they must give at least 35 days’ prior notice, including the reasons, and keep a record of it.
Section 57 (11) of the Banks and Financial Institutions Act, 2073, states that the borrower must If the interest and penalties are not paid within the time specified in the loan transaction document or contract, the bank or financial institution will have to write to the Credit Information Center Limited to blacklist such borrower in accordance with the prevailing law.
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