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BFIs block 89,000 accounts over loan defaults and bounced checks

Nepalkhabar

 |  Kathmandu

The bank accounts of 89,000 customers of banks and financial institutes (BFIs) have been blocked. As many as 40,000 bank accounts were blocked in the past one month between mid-April to mid-May, restricting them from having access to financial services.

This includes account holders who took loans post-2047 BS but have not repaid it, as well as those whose loans could not be cleared due to bounced checks.

According to the Credit Information Bureau of Nepal, 89,000 customers were blacklisted till June 6 due to failure to repay their bank loans and bounced checks.

BFIs blacklisted debtors restricting their access to financial services until the collateral is auctioned and the bad debt is repaid.

While 39 percent out of 89,000 blacklisted account holders are the defaulters who failed to repay their loans, 61 percent have faced action due to bounced checks, according to the Bureau.

How are the customers removed from blacklist?
anks recommend the Bureau to remove the defaulter from the blacklist after putting up the collateral for auction.

In the ongoing fiscal year, the number of blacklisted customers failing to repay loans has surged drastically, according to Bijaya Kunwar, spokesperson at the Credit Information Bureau.

“Unlike the previous fiscal year, wherein customers were blacklisted on the ground of bounced checks, 5,000 to 6,000 customers are blacklisted a month for failure to repay loans this fiscal year,” he said.

Both debtors and BFIs are facing difficulties 
Banker Bhuwan Dahal admits to have been unable to recover loans for the past two years.

The situation has posed difficulties not only to the debtors but also to the BFIs, according to Dahal.

“Creditors are not only facing difficulties to repay loans but banks are also encountering difficulties recovering loans for failure to auction for collateral,” said Dahal.

Bad loan is increasing every single day for BFIs’ failure to recover loans.

According to Nepal Rastra Bank's latest data from Chaitra (mid-March to mid-April), non-performing loans (NPLs) issued by BFIs in Nepal range betwee between 4 and 5 percent.

While the NPLs issued by Laxmi Sunrise Bank reaches 5 percent, that of nine other banks including Nepal Bank, Prabhu Bank is put at 4 percent.

Similarly, the NPLs of Agricultural Development Bank is put at 3.17 percent, while that of four banks including NIC Asia is around 3 percent.  

Likewise, the bad loan of Machhapuchchhre Bank is 3.68 percent and that of Citizens Bank is put at 3.76 percent, NRB has said.

NPLs goes up when the BFIs fail to recover loan on time or the creditors do no repay their loans on time. This shows an increase in the NPLs in the balance sheet.

The loans which remain unpaid for a period between 3 to 12 months in Nepal are categorized as NPLs by BFIs.

NRB, the central bank of Nepal, considers a non-performing loan (NPL) ratio below 5 percent to be a healthy benchmark for the banking sector.



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