Number of blacklisted borrowers rose by 37 times in the last five years
KATHMANDU, Nov 18: Industrialists and entrepreneurs are increasingly falling into the black list due to the deterioration of the business environment. According to the Nepal Rastra Bank (NRB), 94,000 borrowers have been blacklisted in the last one year.
According to the Strategic Analysis Report-2024 published on Sunday by NRB's Financial Information Unit, 94,477 debtors have been blacklisted in the fiscal year 2023/24.
In the last five years, the number of blacklisted borrowers has risen by 37 times. In the fiscal year 2018/19, for example, a total of 2,537 people were blacklisted, and this number has increased in 2023/24. According to the Credit Information Bureau (CIB), the number has already reached 16,400 by the mid-November of the current fiscal year.
The number of borrowers, under the blacklist due to inability to repay loans of banks and financial institutions and due to bounced checks, is gradually increasing.
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Chandra Prasad Dhakal, the president of the Federation of Nepalese Chambers of Commerce & Industry (FNCCI), said that after the COVID-19 pandemic, many businesses have declined which has led to an increase in the number of business owners condemned to the blacklist. He said, “Due to the fall in business activities, there have been significant challenges in the country's economy. As industries and businesses languish, the number of people on the blacklist is also rising.”
Due to the impact of the COVID-19 pandemic country's economy, industrialists and businessmen have faced challenges. Many industrialists and entrepreneurs have also auctioned their business due to deterioration of business.
The number of people listed under the blacklist has been rising every year. In the fiscal year 2018/19, around 2,537 borrowers were blacklisted, followed by 4,620 in the fiscal year of 2019/20, around 6,514 in the year 2020/21. Similarly, in the fiscal year 2021/22 the number reached 15,995, and the number of blacklisted borrowers grew to a whopping 34,000 in the fiscal year 2022/23.
The country’s crumbling economy has negatively impacted trade and business. Due to the failure to generate the expected demand in the market, the slowdown in the economy has not improved. This is the reason why the number of blacklisted industrialists and entrepreneurs listed has been increasing.
According to the CIB, if the loan taken from banks and financial institutions is not paid in accordance with the terms for nine months, the borrowers will then be blacklisted on the recommendation of the concerned institutions. Additionally, if a check is bounced three times the issuer of the check will be blacklisted.
Bijay Kunwar, the spokesperson for the CIB, said that banks and financial institutions recommended blacklisting around 250 people every day. “Debtors are blacklisted if the loans are not paid on time and their check bounces. Following COVID-19 pandemic, the number of people being blacklisted has increased due to a slowdown in economic activities,” Kunwar said.
After the impact of COVID-19 on global demand and supply chains, the problems appearing in the economy have not come back on track yet. Following that, the foreign exchange reserves decreased. The economy contracted further after the government tightened imports. Entrepreneurs said that although foreign exchange reserves are sufficient, the overall business environment remains challenging and has not improved.
Financial crime using technology
The use of technology to commit financial crimes has also increased. According to the ‘Strategic Analysis Report 2024’, there have been many cases of financial fraud based on cyber technology.
In a detailed analysis of suspicious transactions related to cyber technology-based fraud during the first five months of 2024, it was found that individuals in the age group of 18 to 24 years, who have listed their occupation as ‘student,’ were the most involved in such transactions.
In most of the suspicious accounts, it has been found that illegal transactions have taken place within three months of the operation of such accounts. The main methods used for cyber fraud based on technology include gift and parcel fraud, fraud through social media, fake platforms related to online business, OTP fraud, lottery fraud and others.
In order to reduce fraud based on cyber technology, the necessary suggestions have been recommended to reporting organizations, law enforcement agencies, investigative agencies, and regulatory and supervisory agencies.
