KATHMANDU, March 26: The number of blacklisted individuals has surged notably at a time when banks and financial institutions (BFIs) have been struggling to recover their bad debts.
The records with the Credit Information Bureau (CIB) of Nepal show that a total of 37,523 individuals were blacklisted in the first eight months of the current fiscal year. In one year between mid-April 2023 and mid-April 2024, the CIB blacklisted 33,276 individuals under charges of defaulting loans.
According to the CIB, the cases of loan defaulters rose significantly in the past seven years. On an annual basis, only 1,310 individuals were blacklisted as of mid-April 2019, which has rapidly accelerated to over 37,000 in a year. Till date, the total number of blacklisted individuals has crossed 110,000.
Seven construction companies blacklisted
Based on the period of the overdue of the loans issued by the banks, the NRB has categorized NPLs as watch list, sub-standard, doubtful and bad loans. The loans in which the borrowers do not turn up to pay interest until 90 days of the due date are considered under the watch list. Substandard loans are those whose interest and principal payments are due up to six months. Doubtful loans are those in which payments remain due for six months to one year, while the overdue period is more than one year in case of bad loans.
Since 2019, the central bank has made all the ‘A’, ‘B’ and ‘C’ class banks and financial institutions to provide to it information about loans crossing the repayment deadline of more than 90 days. The BFIs also need to notify the CIB about this type of loan if the amount is Rs 1 million and more. In case of microfinance related loans, the CIB can blacklist loans worth Rs 500,000 if the due date crosses 90 days.
Citing the economic slowdown, industrialists and businessmen have failed to pay the interest and principal of the loans to the bank within the stipulated time. As a result, the non-performing loans of commercial banks alone reached to around five percent. The non-banking assets also grew 79.89 percent to Rs 35.82 billion.
Meanwhile, Nepal Police registered 1,127 cases of banking offense in the Kathmandu Valley over the last one month. The number makes up 25.22 percent of the total criminal activities registered by the police during the review month.
According to Deputy Inspector General of Police Dinesh Kumar Acharya, the spokesperson for Nepal Police, the Kathmandu Valley witnessed a significant rise in criminal activities, particularly banking-related crimes.
With check bounce cases surging in recent years, the government has moved to strengthen legal provisions against banking crimes. In early February, the House of Representatives (HoR) unanimously passed an amendment to the Banking Offenses and Punishment Act, 2064, presented by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel.
DPM Paudel argued that the revised law aims to create a stronger legal framework for investigating, prosecuting, and penalizing financial crimes, including check related fraud. The amendment introduces stricter punishments for offenders to enhance public confidence in the banking system and maintain financial stability.