Move aimed at ensuring transparency, addressing multiple borrowing problem
KATHMANDU, July 30: Bank and financial institutions (BFI) will now have to make public the details of borrowers who benefit from the refinance facility and subsidized interest loan schemes.
While BFIs were not releasing the identity of beneficiaries of such concessional credit schemes, the NRB has made it now mandatory for them to disclose the details of those who acquire such loans.
Releasing a circular to banks and financial institutions (BFIs) on Monday to implement various provisions that it introduced in the monetary policy for the current fiscal year 2020/21, Nepal Rastra Bank (NRB) told them to release the details of borrowers receiving subsidized-interest loans and credits under its refinance facility. BFIs will have to make the details of such borrowers’ public on a quarterly basis through their websites, according to the circular issued by the central bank.
The new rule requiring disclosure of the borrowers acquiring concessional loan schemes comes in the wake of growing calls for transparency on who benefits from such government and central bank-sponsored schemes.
As banks were withholding details of borrowers of the refinance facility and subsidized interest loan schemes, there were concerns whether those subsidized loans and the refinancing facility were reaching targeted beneficiaries.
“There should be a complete transparency of schemes run by the government. We issued the circular to make sure that the details of the borrowers, who receive subsidy or concession from the state coffer, are also in the public domain,” Gunakar Bhatta, the NRB spokesperson, told Republica.
So far, BFIs have been keeping the beneficiaries of government-aided concessional loan schemes secret from the public, citing that such information would amount to a disclosure of proprietary information of their clients. Bankers say that they were not releasing the details of borrowers of such schemes as the central bank had not asked them to do so.
“There was no legal requirement for us to make the details of our borrowers public. Now, with the new circular making the disclosure mandatory, we will have to publicize the details of those beneficiaries,” said Bhuvan Dahal, president of Nepal Bankers’ Association (NBA).
NRB officials also say that the new rule will also help address the problems of duplication of borrowing under the government-aided schemes. “There used to be complaints that some genuine borrowers were not receiving the support while those having influence on banks were easily getting the subsidized loan schemes. Some used to get the refinance multiple times. The disclosure will allow anyone to see who exactly are benefitting from these schemes while also helping to address the problem of duplication,” said NRB Spokesperson Bhatta.
The outstanding refinance facility provided by the NRB at a concessional rate for promoting productive sector activities and export amounted to Rs 11.82 billion in mid-June 2020, according to the NRB.
Similarly, a total of 29,157 borrowers have acquired a total of Rs 55.54 billion in nine various subsidized-interest loan schemes.