Govt cancels Rs 35m in loans taken by killed or disappeared
KATHMANDU, MAR 07 -
A recent Cabinet meeting has decided to forgive loans up to Rs 400,000 taken by those killed or disappeared during the decade-long conflict, People’s Movement and Madhes Movement. The total loans are estimated to amount to Rs 35 million.
According to the government’s decision, credit issued by four government banks—Agricultural Development Bank (ADBL), Rastriya Banijya Bank (RBB), Nepal Bank Limited (NBL) and Sana Kishan Bikas Bank (SKBB)—to the dead and disappeared in the violence that has wracked the country in recent years has been cancelled.
“ Loan s of up to Rs 400,000 will be waived as per the Cabinet decision,” said Finance Secretary Shanta Raj Subedi. He added that only the loans taken by those killed or disappeared would be cancelled, not money that has been borrowed by their family members or other persons. According to him, the Cabinet has extended the deadline until mid-April this year for families of those killed or disappeared during the three incidents to apply for a waiver of the loans. Initially, it had been planned to cancel loans up to Rs 30,000 and interest on loans up to Rs 100,000. However, the Cabinet’s economic and infrastructure committee had decided to waive loans up to Rs 400,000, according to Finance Ministry officials. At that time, the deadline for applications had been set for mid-May 2009.
“As some potential beneficiaries who missed the deadline had complained, the time limit was extended till mid-April,” said Mahesh Dahal, joint secretary at the ministry. He added that the ministry was preparing to write to the banks concerned to notify them of the Cabinet’s decision. Under the arrangement fixed by the government, the banks will be compensated for the principal, but they will lose the interest and penalty.
Meanwhile, the Cabinet has also decided to waive Rs 11.4 million taken by those killed and disappeared from RBB and reimburse the amount. However, RBB will have to waive the interest amounting to Rs 11.9 million. Subedi said that these loans were related to the above category but had not yet been cancelled.
RBB’s chief executive officer Krishna Prasad Sharma said that the bank had submitted the details of loans up to Rs 400,000 of those killed and disappeared during the three incidents of violence as per the directive of the Finance Ministry. “This is different from the loans forgiven for small farmers whose loans up to Rs 30,000 and interest on loans up to Rs 100,000 were cancelled,” said Sharma.
In 2008, the then Maoist-led government had introduced the policy of cancelling loans taken by small farmers. The government had paid back Rs 6.4 billion including interest at the rate of 10 percent.
ADBL has written off debts totalling more than Rs 4 billion, RBB Rs 680 million and NBL Rs 250 million, according to bank officials. Nepal Rastra Bank officials and bankers have flayed the government’s decision to cancel the loans as it would harm the people’s banking habit.
Central bank officials said that borrowers from Sudur Paschimanchal Grameen Bikas Bank and Purbanchal Grameen Bikas Bank had defaulted loans en masse resulting in their financial health being ruined as a result of government assurances given to borrowers from Grameen Bikas Bank that their debts would be forgiven.
Source: The Kathmandu Post
