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KATHMANDU, Nov 15: Over 15 percent of the industrialists and traders have been blacklisted on charges of banking offenses mainly related to cases of cheque bounce.
According to Nepal Rastra Bank (NRB), more than 150,000 businesspersons have been facing the case of financial offenses out of around 1 million businesses operating in the country.
Speaking at a program on Friday, NRB Governor Biswo Nath Poudel termed the number of soaring cases of blacklisting an ‘unusual.’
Revised interest rate corridor system introduced
Of late, many entrepreneurs have been struggling to pay back banks’ loans, while they have been facing the check bounce cases due to ongoing economic slowdown. The impacts of Gen Z movement and violence have further worsened the situation.
NRB Governor Poudel said the criminalization of individuals in cheque bounce has led to the cases of blacklisting. According to him, the NRB has started discussion to review the provision of loan loss provisions that have created pressure on banks to blacklist individuals amid growing cases of non-payment of bank loans.
As per the unaudited financial reports unveiled by 20 commercial banks, their average NPL has reached 4.86 percent, up from 4.04 percent a year ago. As per the NRB rules, banks and financial institutions (BFIs) have to maintain provision ranging from 1-100 percent of amounts in outstanding loans.
The more a borrower delays in repaying the loan, the larger the amount the banks have to allocate in provisioning, which has created pressure on them to recover outstanding loans.
Poudel said the NRB is ready to implement policies that suit the country in the present context. “The central bank is ready to be flexible as far as possible to address the ongoing odd situation that the country’s financial sector has been facing,” said Poudel, stressing on the need for utilizing loanable funds in rural areas.
