KATMANDU, January 3: Last week, a group of entrepreneurs approached NIC Asia Bank to complain about unnecessary pressure exerted by bank officials on borrowers to pay off the loan amount before the prescribed due date.
According to the entrepreneurs, banks have even threatened borrowers to publish their profiles in daily newspapers or to blacklist them as delinquent debtors. The entrepreneurs claimed that despite having paid the installments to the banks, they face such hassle from the bank officials.
Dinesh Shrestha, vice chairman of the Federation of Nepal Chambers of Commerce and Industry (FNCCI), said a number of traders in Makwanpur, Jhapa and Surkhet, in particular, have also complained about similar measures of the share of commercial banks. “Most of the tourism entrepreneurs have been harassed by a number of commercial banks to make the payments,” Shrestha told Republica.
Nepal Rastra Bank (NRB), in a bid to provide relief to entrepreneurs who suffered heavy losses due to the pandemic, urged banks and financial institutions to adopt a flexible loan collection policy for at least a year . “Along with implementing a refinancing facility and extending the loan repayment period, the central bank has asked banks to adopt flexible policies towards borrowers,” Gunakar said. Bhatta, spokesperson for NRB.
Bhatta said the central bank has not received a complaint against any bank for such misconduct as the entrepreneurs claim. “Although banks’ loan amounts have increased by a noticeable volume recently, they are not under pressure for loanable funds as the market is now filled with excess liquidity,” he said.
According to Bhatta, the existing money supply in the market now stands at 191 billion rupees, even after the central bank absorbed 40 billion from the banking system in recent days. In addition, the central bank provided more than 38 billion to refinance the loans.
Shrestha said the banks have adopted a strict policy against borrowers by ignoring the policy of the NRB. He also criticized banks for charging outrageous service fees to their customers, despite the central bank having capped service fees.
According to a study commissioned by the United Nations Development Program (UNDP) in Nepal, micro, small and medium-sized enterprises have seen their average monthly incomes drop by as much as 95% and they are struggling to maintain their activities. Many of them have remained closed for almost nine months, since the government imposed the lockdown on March 24. As a result, these companies find it difficult to repay the loans on time.
However, a number of successful companies, even during the period, were found to refuse to repay the banks loan under the pretext of the NRB policy. “They expected to receive more benefits from the government and are deliberately delaying the interest on the bank loan,” said a senior FNCCI member.
Bhuvan Kumar Dahal, president of the Nepal Bankers Association, said banks cannot cross the central bank rule to put pressure on borrowers. “This may be a case for some borrowers, but it is not a common problem,” Dahal said, adding that the association is ready to look into grievances if they receive complaints.