Kathmandu. Recently, banks have focused on loan recovery. However, the current situation has shown that the non-performing loans of banks will increase further.
After the interest rates have decreased, loan recovery and investment expansion have not been effective, bankers who are under stress and pressure have started emphasizing recovery. Banks have started focusing on recovering loans that have not been raised in the past and on the principal and interest that are due regularly. They are trying to improve the financial statements of the third quarter of the current fiscal year. However, bankers have said that the expected improvement in loan recovery is not expected.
In the month of Chaitra, banks focus on recovery. However, this time, since no measures have been taken to expand new business, banks have focused on recovery. Although banks have prioritized recovery, there has been no improvement. Therefore, a banker said that non-performing loans are likely to increase further.
Loan recovery in sectors including construction and hotel sectors has been more affected. However, loan expansion is currently improving in these sectors. The loan restructuring facility period provided by the National Bank has expired. However, loan recovery has not improved.
The construction sector was given a deadline to repay loans until mid-Mansir through monetary policy. However, since recovery has not improved yet, the banker says that non-performing loans are likely to increase further.
Recently, the demand for loans has not been able to increase. Which has also slowed down loan growth. Banks have not been able to make new investments. Due to which, the investable amount in the bank has accumulated around 7 trillion, while the interest rate has also decreased to the minimum point. However, credit has not been able to increase at the moment.
Bankers say that if the morale of the private sector can be increased and the economy can be made dynamic, credit will also increase and recovery will also increase. As of Magh of the current fiscal year, credit flowed to the private sector from banks and financial institutions has increased by 283.46 billion rupees (5.6 percent). In the same period of the previous year, such credit had increased by 197.21 billion rupees (4.1 percent). On an annualized basis, credit flowed to the private sector from banks and financial institutions has increased by 7.3 percent in mid-Magh 2081.
Meanwhile, both the bank’s base rate and the interest rate on loans have decreased. In 2081 Magh, the average base rate of commercial banks was 6.46 percent, development banks 8.52 percent and finance companies 9.39 percent. In 2080 Magh, the average base rate of commercial banks was 9.06 percent, development banks 11.13 percent and finance companies 12.70 percent.
Similarly, in 2081 Magh, the weighted average interest rate of commercial banks’ loans was 8.55 percent, development banks 9.90 percent and finance companies 10.88 percent. In 2080 Magh, the weighted average interest rate of commercial banks’ loans was 11.08 percent, development banks 12.85 percent and finance companies 13.93 percent.
