Central bank revises big borrowers definition
KATHMANDU:
The central bank will now onwards recognise and monitor the loans exceeding Rs 50 million as large loans.
The borrowers, who have taken loans more than Rs 50 million from commercial banks will be considered as big borrowers. Currently, a borrower, who borrows over Rs 10 million are considered large borrowers, according to the Unified Directives issued by Nepal Rastra Bank (NRB) for the fiscal year 2011-12.
“Currently, Rs 10 million can not be considered as a large amount so the central bank felt the need of upward revising the amount,” said spokesperson of the central bank Bhaskar Mani Gyanwali.
The large scale borrowers are closely monitored by the central bank in order to prevent the crisis resulting in case they default the loan. “In order to minimise large risk the central bank needs to keep tab on the big borrowers,” he said.
The unified directive has also provided a breathing space to the liquidity strapped banks and financial institutions by validating the cash in ATM machines as a part of banks and financial institutions (BFIs)’s Statutory Liquidity Ratio (SLR).
“The central bank is hopeful that it will help ease liquidity situation without compromising the prudential norms,” said Gyanwali. SLR is a proportion of the deposits that BFIs need to maintain in liquid form — in cash and government bonds and securities. The central bank has fixed 15 per cent of the total deposits as SLR that are not available for lending purpose. SLR is one of the powerful tools of monetary policy to control money supply. Higher SLR ensures the solvency of the banks and financial instititons but at the cost of liquidity in the financial market as the funds of credit is contracted. The provision is supposed to release about Rs 1.5 billion to Rs 2 billion at the disposal of banks and financial institutions for lending purpose.
The central bank has also forbidden the executive chairman to undertake the position of chief executive. In the banks and financial instititons that went through solvency crisis in the recent times had chief exectutive as the executive chairman who wielded enormous power over the company.
The directives have forbidden the blacklisted promoters to sell their shares to avoid any complications later on. The promoters can not invest in co-operatives at all.
The central bank has tried to hasten the process of clearing the names of borrowers from Credit Information Bureau within six working days of payment of accumulated loan and interest, according to new rule.
Source: THT
The central bank will now onwards recognise and monitor the loans exceeding Rs 50 million as large loans.
The borrowers, who have taken loans more than Rs 50 million from commercial banks will be considered as big borrowers. Currently, a borrower, who borrows over Rs 10 million are considered large borrowers, according to the Unified Directives issued by Nepal Rastra Bank (NRB) for the fiscal year 2011-12.
“Currently, Rs 10 million can not be considered as a large amount so the central bank felt the need of upward revising the amount,” said spokesperson of the central bank Bhaskar Mani Gyanwali.
The large scale borrowers are closely monitored by the central bank in order to prevent the crisis resulting in case they default the loan. “In order to minimise large risk the central bank needs to keep tab on the big borrowers,” he said.
The unified directive has also provided a breathing space to the liquidity strapped banks and financial institutions by validating the cash in ATM machines as a part of banks and financial institutions (BFIs)’s Statutory Liquidity Ratio (SLR).
“The central bank is hopeful that it will help ease liquidity situation without compromising the prudential norms,” said Gyanwali. SLR is a proportion of the deposits that BFIs need to maintain in liquid form — in cash and government bonds and securities. The central bank has fixed 15 per cent of the total deposits as SLR that are not available for lending purpose. SLR is one of the powerful tools of monetary policy to control money supply. Higher SLR ensures the solvency of the banks and financial instititons but at the cost of liquidity in the financial market as the funds of credit is contracted. The provision is supposed to release about Rs 1.5 billion to Rs 2 billion at the disposal of banks and financial institutions for lending purpose.
The central bank has also forbidden the executive chairman to undertake the position of chief executive. In the banks and financial instititons that went through solvency crisis in the recent times had chief exectutive as the executive chairman who wielded enormous power over the company.
The directives have forbidden the blacklisted promoters to sell their shares to avoid any complications later on. The promoters can not invest in co-operatives at all.
The central bank has tried to hasten the process of clearing the names of borrowers from Credit Information Bureau within six working days of payment of accumulated loan and interest, according to new rule.
Source: THT
