Bankers have welcomed the decision, saying that it will help them limit the loan provisioning provisions and keep profit at better than expected position.[break]
The central bank on Tuesday issued a circular, stating that borrowers of any BFIs have been given one more month till mid-August 2011 to clear their outstanding loans and interests.
Bhaskar Mani Gynwali, spokesperson of NRB, said the central bank took the decision considering the request from lenders and BFIs. “We take it as part of our responsibility to address the problem and our present flexibility is just an example of it,” he added.
Interestingly, officials of the Nepal Bankers´ Association (NBA) had met NRB officials just a day ago, requesting to extend loan repayment deadline.
The decision has allowed BFIs to book the loans under same category even if they have not been served by Mid-July 2011.
Commenting on the decision, P K Mohapatra, CEO of Everest Bank, said the decision was good temporarily only. “This is not a good practice in the long run. It might bring bad results, as borrowers would expect further extension in repayment. This can affect borrowers´ paying behavior,” he added.
In an attempt to ease repayment of loan, NRB last Tuesday had decided to allow renewal of realty loan and had raised the cap of home loan to Rs 8 million. It had also allowed lender to renew realty loan for a year after clearing the outstanding interest.
This provision means BFIs can exclude substantial chunk of their loans from real estate loan on which the NRB has put a cap. The central bank´s directive requires BFIs to slash their realty loan exposure to 25 percent of the total loan portfolios.
Unlike the previous decision, the new decision is applicable for lenders of the other sectors too. “This decision is not simply for borrowers of realty sector but all the borrowers who failed to pay their interest and loan in the last fiscal year,” added Gynwali.
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