Bankers have expressed their dissatisfaction over the Nepal Rastra Bank (NRB)’s newly enforced rule on blacklisting of the loan defaulters.
Issuing a unified directive, the NRB on Wednesday asked the banks and financial institutions (BFIs) to first take into auction the property of the borrowers that had been considered for the collateral, before blacklisting the defaulters. In the new provision, the BFIs cannot blacklist defaulters if the due amount is recovered from the revenue generated out of the auction sale of the collateral. “If the revenue amount from sale of the securities fall short of the borrowed amount, then the BFIs will have to extend the deadline by 90 days for the debtor to clear the remaining dues,” reads the directive.
Bankers gathered for a meeting organized by the Nepal Bankers’ Association (NBA) on Sunday, however, said this provision has given much leeway to a number of defaulters who may never turn up to settle their outstanding dues. “The central bank did not even consult with the banks and imposed the rule unilaterally,” said a banker.
Previously, BFIs had been blacklisting the borrowers in cases of bad debts after issuing a 35-day legal notice. From now onward, they will have to wait until the complete selling of the securities through auction before taking any further action. “The provision is certain to increase the proportion of the bad debts at a time when the banks have been reeling under a soaring ratio of non-performing assets in their portfolio,” the banker said.
