KATHMANDU, Jan 3: Last week, a group of entrepreneurs took to NIC Asia Bank complaining about the unnecessary pressure given by the bank’s officials on borrowers to settle the loan amount earlier than the prescribed date of loan maturity.
According to the entrepreneurs, banks have even been threatening the borrowers to make public their profiles in daily newspapers or to blacklist them as the loan defaulters. Entrepreneurs claimed that despite having been paying the installments to the banks, they are facing such hassles from the banks officials.
Dinesh Shrestha, vice-president of the Federation of Nepal Chambers of Commerce and Industry (FNCCI), said a number of traders from Makwanpur, Jhapa and Surkhet, in particular, have also been complaining about similar moves by the commercial banks. “Mostly 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 relieve the entrepreneurs who faced heavy loss due to the pandemic, has asked banks and financial institutions to take flexible policy on loan recovery for at least a year. “Along with implementing refinance loan facility and extending loan repayment period, the central bank has directed the banks to take flexible policies on borrowers,” said Gunakar Bhatta, spokesperson of NRB.
Bhatta said the central bank has not received complaints against any bank for such a misconduct as claimed by the entrepreneurs. “Although the lending amounts of banks have surged by a notable volume recently, they are not in pressure for loanable funds as the market is now flushed 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 absorbing 40 billion from the banking system in recent days. In addition, the central bank has provided over 38 billion to refinance loans.
Shrestha said that banks have been adopting stringent policy against the borrowers by ignoring the NRB’s policy. He also blamed the banks for charging rampant service charges from their clients although the central bank has capped the service charge fees.
According to a study commissioned by the United Nations Development Program (UNDP) in Nepal, micro, small and medium enterprises have seen up to 95 percent decline in average monthly revenue and they struggle to sustain their businesses. Many of them have remained closed for almost nine months, since the government imposed lockdown on March 24. As a result, these enterprises are having hard time to pay back the loans on time.
However, a number of well performing enterprises even during the period are found to be declining to pay back the banks’ loan under the pretext of NRB policy. “They have been expecting to receive more benefits from the government and are deliberately delaying the interest on the banks’ loan,” said a senior member of FNCCI.
Bhuvan Kumar Dahal, president of Nepal Bankers’ Association, said the banks cannot cross the rule of the central bank to pressurize the borrowers. “It might be a case for some borrowers, but it's not a common issue,” said Dahal, adding that the association is ready to consider grievances if they receive complaints.