Nepal Bank Ltd (NBL) has announced ranges of interest rebate to encourage repayment of the old defaulted loans of up to Rs 2.5 million.
The borrowers that have borrowed up to Rs 2.5 million which was floated before mid-April 2002 can use this opportunity to clear their names from the bank’s defaulters.
According to NBL, the borrowers with principal amount less than Rs 100,000 can pay the outstanding principal and 20 per cent of the amount and clear their names. The range of additional amount to be paid is based on the amount of principal with highest being Rs 2.5 million, for which defaulters can pay up to double the outstanding amount, excluding the compounded interest.
The oldest bank in Nepal has been struggling with overwhelming numbers of bad loans since the past 15 years. Despite going through 10 years of Financial Sector Restructuring Programme that began in 2002, the bank’s non-performing loans are still 5.83 per cent of total loans.
“The bank has been announcing rebate on interests for the defaulted loans — especially small ones, which encourages more borrowers to repay the loans and clear their names,” pointed out coordinator of Nepal Rastra Bank (NRB) drafted management team Maheshwor Lal Shrestha.
“We had offered a similar rebate on such loans a few years earlier also and the response of such small defaulters was encouraging as our scheme allows them to pay less than the actual outstanding interest and principal that are accumulated in more than the last 10 years,” he added.
NRB, that is taking care of the bank’s management, will exit the bank only after it gets its capital adequacy
ratio (CAR) to the regulatory requirement of 10 per cent. NBL — that had CAR of 0.84 per cent till mid-January— will need to sell assets worth Rs two billion to be reach competitive level.
“This rebate is valid till the end of the current fiscal year, and any loans that are not cleared after the deadline will be recovered by selling the assets pledged as collateral,” informed Shrestha.
This will allow the bank to write off those defaulted loans and clean its balance sheet.
A comprehensive audit on the bank discovered the bank was on the brink of insolvency due to a large number of willful defaulters in 1999, thus bringing about the restructuring programme. Back then, the amount of non-performing assets at the bank neared 40 per cent of total loans.
source: the himalayan times,21 march 2014
LINK
The borrowers that have borrowed up to Rs 2.5 million which was floated before mid-April 2002 can use this opportunity to clear their names from the bank’s defaulters.
According to NBL, the borrowers with principal amount less than Rs 100,000 can pay the outstanding principal and 20 per cent of the amount and clear their names. The range of additional amount to be paid is based on the amount of principal with highest being Rs 2.5 million, for which defaulters can pay up to double the outstanding amount, excluding the compounded interest.
The oldest bank in Nepal has been struggling with overwhelming numbers of bad loans since the past 15 years. Despite going through 10 years of Financial Sector Restructuring Programme that began in 2002, the bank’s non-performing loans are still 5.83 per cent of total loans.
“The bank has been announcing rebate on interests for the defaulted loans — especially small ones, which encourages more borrowers to repay the loans and clear their names,” pointed out coordinator of Nepal Rastra Bank (NRB) drafted management team Maheshwor Lal Shrestha.
“We had offered a similar rebate on such loans a few years earlier also and the response of such small defaulters was encouraging as our scheme allows them to pay less than the actual outstanding interest and principal that are accumulated in more than the last 10 years,” he added.
NRB, that is taking care of the bank’s management, will exit the bank only after it gets its capital adequacy
ratio (CAR) to the regulatory requirement of 10 per cent. NBL — that had CAR of 0.84 per cent till mid-January— will need to sell assets worth Rs two billion to be reach competitive level.
“This rebate is valid till the end of the current fiscal year, and any loans that are not cleared after the deadline will be recovered by selling the assets pledged as collateral,” informed Shrestha.
This will allow the bank to write off those defaulted loans and clean its balance sheet.
A comprehensive audit on the bank discovered the bank was on the brink of insolvency due to a large number of willful defaulters in 1999, thus bringing about the restructuring programme. Back then, the amount of non-performing assets at the bank neared 40 per cent of total loans.
source: the himalayan times,21 march 2014
LINK
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