Despite a noticeable increase in bad debts, banks won’t experience a severe crisis any time soon: NBA

KATHMANDU: The Nepal Bankers’ Association (NBA) stated on Thursday that there is a high likelihood that bank bad debts will rise significantly in the future.

The association estimates that commercial banks’ non-performing loans now account for 2.49 percent of all loans.

The decline in land transactions caused by the government-imposed ban on land plotting, according to NBA President Sunil KC, has been a major factor in the banks’ difficulties in loan recovery.

“The drop in land transactions has resulted in an increase in bad debt cases,” KC claimed. “Among other industries, small and medium-sized businesses, the construction industry, and poultry businesses are likely to experience an increase in loan defaults at banks. ” .

However, KC asserted that despite an increase in loan defaults, banks won’t suffer sizable losses. The financial condition of the banks won’t significantly worsen because they have taken an average margin of 70% against the loan collateral, he continued. .

Bankers urged the government to pay development project bills on time in order to reduce the amount of bad debts in the building sector.

In light of the skyrocketing interest rates around the world, they claimed that the current interest rates are not excessive.

Due to a noticeable increase in their deposit collection, banks are now found to be in a comfortable liquidity position. According to the records kept by the Nepal Rastra Bank, commercial banks have deposits totaling Rs 4.771 trillion. .

According to KC, they are prepared to make loans up to Rs 200 billion. While prioritizing investments in electric vehicles, he added, “We have also adopted flexible policies for home loans.”

Fiscal Nepal |
Friday March 31, 2023, 11:41:04 AM |

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