Bankers in distress: tensions rise as loan recovery pressures lead to violence

KATHMANDU: A viral TikTok song by user ‘Nabin Asmita’ poignantly captures the emotional toll on bankers during the hectic month of Asar, Nepal’s financial year-end. The lyrics lament long hours, unrecovered loans, and the frustration of chasing elusive borrowers: ‘I leave at 8 AM, return home late at night; the very people I lent to turn out to be traitors… They don’t answer calls, miss installments, and now even home visits yield no meetings.’ The song, depicting a weary banker sipping water while lamenting to a loved one, resonates deeply with the banking community facing mounting pressure to recover loans.

As the fiscal year 2024/25 draws to a close, bankers across Nepal are grappling with intense demands to recover loans. The pressure has led to dire situations, including verbal abuse and physical violence. On June 27, Harishchandra Bhatt, branch manager of Global IME Bank’s Lamki branch, was assaulted at his workplace by borrower Amit Bhandari. Bhatt had contacted Bhandari to regularize overdue loan repayments, only to face verbal abuse and physical attack at the bank. ‘There was no personal enmity; it was about loan recovery. He abused and assaulted me,’ Bhatt shared. Although Bhandari later apologized, promising not to repeat such actions, the incident has sparked concern.

Bhatt lamented that such events send a negative message during the critical year-end closing period, undermining the collaborative spirit needed between businesses and banks. ‘When we urge borrowers to regularize payments, getting assaulted isn’t right,’ he said. ‘We’re handling public money, yet face attacks for doing our job.’

The Bankers’ Club Lamki condemned the incident, noting that the attack, perpetrated by an official of the local Chamber of Commerce, threatens the safe working environment of bank employees. Nepal Bankers’ Association Far-West President Pukar Subedi highlighted the broader challenges, stating, ‘The times are tough. Loan recovery is a struggle not just in Far-West but nationwide.’

The pressure stems from directives by Nepal Rastra Bank Governor Dr. Bishwonath Paudel, who has urged aggressive loan recovery efforts. Bankers, including those typically assigned to deposit collection, are now tasked with recovering non-performing loans (NPLs). ‘The central bank has instructed us to be proactive in recovery,’ a banker told Fiscal Nepal. ‘We’re working to bring bad loans under control.

Despite rising business activity boosting bankers’ morale, misinformation campaigns, such as those led by Durga Prasai, accusing banks of arbitrary interest rate hikes, have created distrust. While liquidity and credit-deposit ratios have improved, customer confidence remains low.

NRB Executive Director Kiran Pandit emphasized the need for coordination. “Borrowers are also bank customers. Bankers must maintain regular contact and manage relationships, not just chase recovery at year-end,” he said. ‘Aggressive approaches won’t work; collaboration is key.’

As bankers navigate these challenges, the emotional and physical toll of their efforts underscores the need for a balanced approach to loan recovery, ensuring both accountability and respect.