Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB) has become flexible on the provision of non-banking assets and loans. Nepal Rastra Bank (NRB) has adopted a flexible policy by amending the integrated directive issued to banks and financial institutions.
The amended directive has removed the provision of maintaining 100 percent loss from the date of acceptance of non-banking assets. Earlier, the provision of 100 percent loss should be maintained on the non-banking property accepted by the banks and institutions from the date of acceptance.
Similarly, the amended directive has removed the provision of adjusting the necessary calculation of the loss arrangement created for such assets in case of sale of non-banking assets.
The central bank has also been flexible in its ability to monitor loans. As per the earlier directive, multi-banking loans of Rs 2 billion or more that have not been converted into co-financing loans should be kept under close surveillance. This provision will not be applicable in the case of short-term current capital loans that are not renewable.
Similarly, the provision of bad loans has also become flexible in the NRB. According to the earlier directive, the loan should be kept in bad debt when the auction process has started or the case is going on in the court under the recovery process. Now, through the revised directive, if the loan is regularized after the start of the auction process, it will not be mandatory to classify the loan as bad under this provision.
Amending the directive, the Nepal Rastra Bank (NRB) has made it mandatory for the banks and institutions to sell the collateral and recover the remaining principal and interest if they do not recover any loan. You have to accept the collateral only if the collateral is not sold even after completing the auction process at least 3 times to recover the loan. At the time of acceptance, the prevailing market price of the collateral or the total borrowing amount up to the previous day of accepting the collateral, whichever is less, will have to be evaluated. If the market value of the collateral is less than the amount of the loan, then the amount reduced should be mentioned in the account of profit and loss in the same fiscal year. Earlier, even after completing the mortgage auction process at least 3 times to recover the loan, there was no provision to accept the collateral only if the collateral was not sold.
