NRB willing to "review rules" to help BFIs ward off negative effects of earthquake

ShareSansar, May 6

As Nepal enters a long and painful phase of recovery from the massive earthquake that struck on April 25, devastating many areas of the country, there is a rising concerns among investors about how the market and financial sector will deal with the challenges brought on by the disaster.

ShareSansar.com's Financial Reporter Priyanka Jha spoke to a Nepal Rastra Bank official and some leading lights of the banking sector to find out how they are coping with the consequences of the calamity and how long it would take to revive the finance sector and the market to its pre-quake level.      


Sunil Pokharel
Head of Retail Banking, NIC Asia Bank

The disaster will have an impact on both deposits and loans. Naturally, those who have taken loans they will now need more time to pay interests as their businesses have been affected by the earthquake. Demand in lending might catch up later but not immediately.

In terms of deposits, people are likely to withdraw more money than in normal times.

Market will see a slump for the next 2-3 months. A lot of people will try to sell their shares to rebuild or renovate their homes. I think the decision to close NEPSE till Baishakh end is a right decision at this time. People will get some time to breathe or else they would have started to sell their shares in nervousness.

NIC Asia doesn’t have much exposure to the real estate sector. We provide individual loans and all the loans we extend are insured. We have not invested much in the apartments.

Insurance sector will be the hardest hit as compared to the stocks of other companies, the shares of insurance companies will be sold more. Especially, prices of the shares of non-life insurance companies will fall. The shares of banking sector will also be affected and it is likely to go down as well. Q4 will not be like Q3 or Q2 in terms of profit as banks will focus on rebalancing their balance sheets.  


Anil Shah
CEO, Mega Bank
The earthquake will definitely have an impact on all the sectors. Although all sectors will be affected, the impact on banking and insurance sectors will be a bit different.

Our first concern would be to restore functions at our branches, data-system, and see that all our employees are fine. Most of our resources have not been affected but one of our branches has been damaged badly.

Then our priority is clients. Our main duty is to begin providing loans as soon as possible. If our clients are affected then our business will be affected, too, and it will have an impact on our bank as well as the entire financial sector. But then first we need to find out what has been the affect over the clients.

We have not invested in big real estate projects. We have mostly concentrated on retail lending for individual homes and lands.

The stock of some companies will perform better whereas others are bound to suffer in the aftermath of the earthquake.  Although the banking sector will see some negative impact in the beginning, the sector will bounce back again.


Diwakar Poudel
Head, Brand and Marketing and Corporate Affairs, Standard Chartered Bank

Earthquake will definitely have an effect. I feel it is too soon to assess the impact people are still in state of shock. I think retail business will be much affected. Most big business are based in the Tarai region and that region is not affected much.

It is not the right time to speculate about the stock market. May be stock investors will now invest in a different place. We will know about it after market re-opens and we will be able to see the trend and then we can analyses reasons behind it.  


Min Bahadur Shrestha
Spokesperson, Nepal Rastra Bank

Nepal Rastra Bank is in the process of collecting information and feedbacks from banks and finance institutions on the impact of the earthquake to the sector. Our focus would be to find out how it has and will affect repayment, collateral, and resources.

We will review existing rules and take required steps after necessary information is collected and after we take the views of the bankers.

We want to assure everyone that any changes to rules and provisions will be made keeping in mind the convenience of individual clients as well as the entire banking and financial institutions.