Kathmandu. Nepal Rastra Bank has instructed the banks and financial institutions that loans should be provided at a certain percentage. The share of agriculture and fisheries is only about 23 and a half percent of the total bad loans till last March. The share of the construction sector, including hydropower projects, is about 10 and a half percent. The share of wholesale and retail trade in bad loans is around 10 percent.
According to experts, this is due to the fact that if loans are not provided in the designated areas, they will face the action of regulatory bodies and banks and financial institutions will turn a blind eye to the quality of loans.
After there were too many bad loans in the specified areas and the results were not as intended, the National Bank revised the scope of the areas in which banks and financial institutions must extend mandatory loans in March last year. While there are only agriculture, energy and micro, domestic, small and medium enterprises/businesses under the previously designated sectors, now tourism, information and communication technology based industries and export industries based on indigenous raw materials have also been added.
नयाँ व्यवस्थाअनुसार बैंक तथा वित्तीय संस्थाले कृषिमा १० प्रतिशत प्रवाह गर्नुपर्छ। पर्यटन, लघु, घरेलु, साना तथा मझौला उद्यम/व्यवसाय, ऊर्जा, सूचना प्रविधि र स्वदेशी कच्चा प्रविधिमा आधारित निर्यात उद्योगमा गरेर कुल कर्जाको न्यूनतम २० प्रतिशत कर्जा विस्तार गर्नुपर्नेछ। तर, विपन्न वर्ग क्षेत्रमा न्यूनतम ५ प्रतिशत कर्जा प्रवाह गर्नुपर्ने व्यवस्था भने यथावत् छ।
यसरी हेर्दा अहिले पनि कम्तीमा ३५ प्रतिशत कर्जा बैंकहरूले तोकिएको क्षेत्रमा प्रवाह गर्नुपर्छ। यसमध्ये विपन्न वर्ग, कृषि र साना तथा मझौला उद्यममा गएको ऋण असुलीमा समस्या देखिन थालेको छ।
Rashtra Bank officials also admit that relatively more bad loans are seen in agriculture, energy, micro, small and medium enterprises (priority sectors). Rashtra Bank spokesperson Guruprasad Paudel said that economic activities were affected after the problems in the economy as a whole and its direct impact was on the agriculture, micro, small and medium enterprises sector.
Small entrepreneurs do not have resource options nor can they diversify their business. Therefore, when the economic activity is relaxed, the capital base of small entrepreneurs has been shaken, it has not yet been strengthened,’ he said.
Disadvantaged class loans are loans provided without collateral to low-income and socially backward women, tribals, Dalits, differently abled persons, marginalized communities and small farmers, Kaligarh, laborers and landless families.
The National Bank has instructed the banks to allocate at least 5 percent of the total loans to this sector to operate self-employed micro-enterprises for the economic and social upliftment of the underprivileged. The commercial banks themselves do not invest the loans flowing to the poor. They give wholesale loans to microfinance institutions and the banks get those loans counted among the poor.
As of last March, bad loans of microfinance institutions have reached an average of 11.32 percent. Last June, this ratio was 7 percent. Since then, bad loans of microfinance institutions have increased by 4.32 percentage points to 11.32 percent. The National Bank’s report has shown that there has been a significant increase in the amount of non-performing loans of microfinance financial institutions till last March, but the growth rate of total loans and equity is normal.
As of Chait 2082, bad loans of microfinance institutions are 54.8 billion (i.e. 11.32 percent). Compared to last June, bad loans of microfinance institutions increased by 74.35 percent in March. As of last June, bad loans of microfinance were 31 billion 2 crore rupees. Compared to March of the last financial year, the amount of bad loans has increased by 71.5 percent during the same period of this year.
According to the data of the banks, the average bad loans of banks and financial institutions till the third quarter of the current financial year is 5.60 percent. Sectorally, the most bad loans are seen in agriculture, construction, wholesale and retail trade, transport, communication, public services. According to this, as of last March, there are more than 23 percent bad loans in agriculture and fisheries alone. During the same period, 10.12 in construction, 10.16 in wholesale and retail trade, 8.5 percent in transportation, communication and public services, 7 percent in metal, manufacturing, machine and electrical tools, and 6 percent in hotels and restaurants are mentioned in the financial statement published by the banks.
Government data also shows that bad loans of banks and financial institutions have started to increase. The average bad loan ratio was 3.33 percent in June 2072 and 3.02 percent in June 2080 and reached 5.42 percent by January 2082. “Compared to commercial banks, the non-performing loan ratio of development banks and finance companies is high,” said the economic position paper presented by Finance Minister Swarnim Wagle last May.
An independent assessment has shown that about 18 percent of subsidized interest loans disbursed by banks and financial institutions under the government’s program are misused. Joshi & Bhandari Chartered Accountants, who were given the responsibility of consultants to determine the effectiveness and proper use of subsidized loans in 2081 under the instructions of Rashtra Bank, showed this.
Among the assessed loan files, there are 7 unutilized loans, 12 unidentified target groups, 6 double-utilized loans and 11 percent of misused loans, the report states. Non-identification of the target group, double consumption and suspicion of misuse are also misuse of credit.