Kathmandu. NIC Asia Bank’s non-banking assets have increased instead of decreasing.
Current fiscal year 2082. As of mid-December 2018, NIC Asia’s non-banking assets have reached Rs 4.39 billion. Last fiscal year 2081. In the same period of 1982, it was Rs 4.14 billion. Non-banking assets increased by 6.04 percent compared to the previous year.
According to experts, the impact of aggressive credit expansion by banks and financial institutions in recent years is now visible in the rapid growth of non-banking assets. NIC Asia has also taken an aggressive policy on loan expansion in the past. The bank is now in trouble due to the wrong policies of the then Chief Executive Officer (CEO) Roshan Neupane and the chairman of the bank.
The increase in the non-banking assets of the bank instead of decreasing indicates that the problem in the bank is increasing. The bank is currently engaged in non-banking asset management. The new CEO of the bank, Sujit Shakya, has said that he will manage such assets in a smooth manner, but it is very difficult.
Attempts to sell the houses, land and buildings seized from borrowers who have failed to repay their loans through auction have failed time and again. This has made it difficult for NIC Asia like other banks.
With the increase in non-banking assets, the pressure on the directors and management of the banks has also increased. Representatives of the banks have said that it has become difficult to convert these properties into cash due to lack of buyers, sluggish real estate market and weak pace of the overall economy.
The bank has not been able to come up with a strategy to speed up the recovery process, improve the valuation of collateral assets and ease the sale process through the market, giving priority to non-banking asset management. As a result, the bank’s performance is on the verge of deteriorating rather than improving, according to bankers. Currently, the bank is focusing on expanding small loans. Some employees of the bank say that the new CEO Shakya has not paid attention to the recovery of loans rather than the expansion of loans.
Shakya, like Neupane, is getting more influenced by the chairman and board of directors than institutional decisions. NIC Asia is not only facing bad loans or external economic downturns, but there are other problems as well. Lately, the bank has been deteriorating relations with customers. As a result, anti-bank sentiment seems to be on the rise almost everywhere. Experts say that the bank’s habit of charging high interest rates and focusing only on auction has also degraded the credibility of the bank.
