Kathmandu. The impact of the slowdown in Nepal’s economic activities and the slowdown in the real estate market has started to be seen in the financial condition of the banks. <\/p>\n
Banks are compelled to accept the collateral property as the borrowers are not able to repay the loan on time and the mortgage is not sold even during the auction. As a result, the amount of non-banking assets (NBAs) in bank accounts has increased significantly. There has also been an increase in the number of banks publishing blacklisting and mortgage auction notices in the daily newspapers. This shows that the banks’ loan recovery is under pressure. <\/p>\n
Although the bankers are looking for a flexible policy on loan classification and recovery, the NRB has not brought a policy accordingly. This shows that non-banking assets are increasing in banks. <\/p>\n
As of mid-May, all 20 commercial banks had non-banking assets worth Rs 45.99 billion, according to the data. Although the main business of banks is loan disbursement and interest income, the accumulation of large amounts of real estate and other collateral assets has increased pressure on liquidity management, profitability and new credit expansion capacity. <\/p>\n
Himalayan Bank has borne the highest burden of non-banking assets. The bank has assets worth more than Rs 6.05 billion. Similarly, Global IME Bank has Rs 5.90 billion, Prime Commercial Bank Rs 4.99 billion and Nepal Investment Mega Bank Rs 4.65 billion. Similarly, NIC Asia Bank and Nabil Bank have accumulated assets worth Rs 4.19 billion and Rs 3.50 billion, respectively. <\/p>\n
Kumari Bank, Laxmi Sunrise Bank, NMB Bank, Prabhu Bank, Citizens Bank, Agricultural Development Bank, Nepal SBI Bank and Sanima Bank have managed non-banking assets worth over Rs 100 crore. However, the amount of such assets in Siddhartha Bank, Machhapuchchhre Bank and Everest Bank is comparatively low. The state-owned Rastriya Banijya Bank and Nepal Bank have non-banking assets of Rs 310 million and Rs 230 million, respectively. This indicates that their bad debt management is relatively strong. <\/p>\n
Standard Chartered Bank Nepal has been able to keep its non-banking assets at zero. The bank has been able to maintain this situation due to the strategy of investing in quality and less risky sectors rather than aggressive loan expansion. <\/p>\n
Bankers say that the sluggish real estate transaction in the market, the construction sector is not vibrant and the overall economic activity is weak. Banks have to hold collateral assets worth billions of rupees, which will have a direct impact on the ability to disburse loans and distributable profits unless these assets are converted into cash. <\/p>\n
To address this challenge, the government is preparing to establish a ‘National Asset Management Company’. Nepal Rastra Bank had announced to prepare a draft of the law related to asset management through the previous Monetary Policy and the plan has been made public through the budget for the next fiscal year to establish an institution with special legal powers by coming January. <\/p>\n
It is expected that such an institution, which is internationally compatible with the concept of ‘bad bank’, will buy and manage bad loans and non-banking assets in the accounts of banks. However, until the necessary legislation is formulated and institutional preparations are completed, banks will have to manage the burden of non-performing assets worth about Rs 46 billion on their own.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The impact of the slowdown in Nepal’s economic activities and the slowdown in the real estate market has started to be seen in the financial condition of the banks. Banks are compelled to accept the collateral property as the borrowers are not able to repay the loan on time and the mortgage is not […]<\/p>\n","protected":false},"author":16,"featured_media":236917,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45117,45031,45159],"tags":[],"class_list":["post-304482","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-finance-en","category-banner-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/304482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=304482"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/304482\/revisions"}],"predecessor-version":[{"id":304483,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/304482\/revisions\/304483"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/236917"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=304482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=304482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=304482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}