Kathmandu. After lobbying from bankers, the government is ready to open an asset management company. The government has announced to set up a property management company in the budget for the next fiscal year.
In the monetary policy of the current fiscal year, the then Governor Maha Prasad Adhikari had mentioned that initiatives would be taken to establish a property management company. Accordingly, the Rastra Bank has also forwarded the work of writing the draft.
At present, the government has announced to set up such a company till the budget through the policy and program of the next fiscal year. Finance Minister Bishnu Poudel has said in the budget for the upcoming fiscal year that an asset management company will be established for the management of bad loans and non-banking assets of banks and financial institutions. ’
Earlier, it was stated in the policy and program that an asset management company will be established to manage the non-banking assets and bad loans of banks and financial institutions.
The government is trying to move ahead in this direction after the High Level Economic Reform Suggestion Commission led by former Finance Secretary Rameshwor Khanal suggested the establishment of a property management company. The Commission had suggested the government to set up an asset management company at a time when non-performing loans and non-banking assets were on the rise due to weak debt recovery.
The banking sector has long said that companies are necessary to manage non-banking assets in Nepal. Now the banking sector is excited after the announcement of setting up the company in the budget itself.
Of late, non-banking assets are becoming a headache for banks. Banks are under more pressure as such assets continue to grow.
Banks and financial institutions accept such collateral on their own if the collateral of loans not raised on time is not sold in the auction. Banks have to complete the auction process before accepting the mortgage themselves. The property so acquired is a non-banking asset. According to the regulatory provision, banks and financial institutions will have to provision 100 percent of the amount to avoid such risk from the time the non-banking assets are exhausted.
As non-banking assets increase, companies have been saying that they should set up asset management companies and accept it. Accordingly, the central bank has already started working for this.
In the monetary policy of the current fiscal year, the Rastra Bank had announced the establishment of an asset management company and said that it would prepare a draft law. Accordingly, the central bank is working to write the draft by forming a task force. Although the Rastra Bank has prepared a draft law, it may take some time for the company to be established after the law is passed by the parliament.
The banking sector believes that the company will be established within the next fiscal year as the provision has already been made in the budget. Asset management companies are often brought into operation in the country for the purchase of non-banking assets and passive loans of banks and financial institutions. For this, the central bank or the government has given him privileges.
According to the data, both non-performing loans and non-banking assets are increasing in Nepal due to the slowdown in the economy in recent times. Stakeholders have been saying that the need for such a company has increased for its management.
It has now been announced to set up a property management company through monetary policy, policy and program and budget. The banking sector has stressed on making it easier by implementing it quickly.
