Going by statistics, the
crucial issue of
non-performing loans (NPL)
ailing the financial sector
in Nepal may appear to have
been sorted out. The level
of NPL, which stood at a
whopping 60 per cent prior
to the financial sector
reforms in 2002 and hovered
around 30 per cent in 2003,
has come down to 14.22 per
cent in 2006.
But thereby hangs a story of
massive write-off of loans
and interest on loans. Nepal
Bank Ltd has written off
loans amounting to almost Rs
4 billion and an interest of
around Rs 8 billion, points
out Nepal Rashtriya Bank.
According to the bank
regulator, even Rashtriya
Banijya Bank is planning to
write off a total of Rs 12
billion loans. “But the
problem is far from solved,”
avers Surender Man Pradhan,
NRB executive director
(Regulation), “as the NPL
level remains far above the
acceptable level of less
than five per cent.”
Although the management
teams have struggled to
recover Rs 17 billion from
medium and small-sized loans
this year, the big fish have
gone scot free.
read more
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