Non-performing loans of commercial banks up by Rs 7 billion
KATHMANDU, May 22:
Non-performing loans (NPL) of commercial banks is increasing with their expanding loan portfolio.
NPL of commercial banks increased by Rs 7 billion in the first nine month of the current fiscal year, a snap survey of unaudited financial reports of 30 commercial banks shows. NPL stood at Rs 18.65 billion at the end of 2012/13.
However, total loans of commercial banks increased by Rs 130 billion over the first nine months of the current fiscal year. Total lending portfolio of commercial banks has increased to Rs 845 billion till the end of the third quarter.
Sanima Bank had the lowest NPL of 0.05 percent at the end of third quarter, followed by Nepal SBI Bank (0.35 percent), Standard Chartered Bank Nepal (0.52 percent) and Everest Bank (.062 percent). Nepal SBI Bank, Standard Chartered and Everest Bank are regarded as the good performer in terms of NPL in the past few years.
Likewise, Nepal Investment Bank (NIBL), Rastriya Banijya Bank (RBB), Standard Chartered Bank, NMB Bank and Machchhapuchhre have significantly reduced their NPL by recovering their bad loans. RBB has reduced its NPL at Rs 52.56 million. Similarly, NIBL, Standard Chartered, NMB Bank and Machchapuchhre Bank have reduced their NPL at Rs 37 million, Rs 37.68 million, Rs 38 million and Rs 6.8 million.
“Commercial banks are putting more efforts to recover their bad loans,” Ashoke SJB Rana, former president of Nepal Bankers Association and the CEO of Himalayan Bank, told Republica.
Banks and financial institutions have to allocate 1 percent of loan amount for loan provision at the time of issuance of loan. They have to allocate 25 percent of the loan amount if interest and principal is not repaid for three straight months. Likewise, they have to provision 50 percent of the loan amount if loan and principal is not repaid for six straight months and 100 percent for a year. According to existing regulations, loans are categorized as NPL if interest and principal is not repaid for three straight months.
Kist Bank has the largest volume of NPL with 23.72 percent of its total loans worth Rs 14.51 billion categorized as NPL. Its NPL stood at 6.59 percent of total loan portfolio of Rs 16.82 billion at the end of 2012/13.
A new management team took charge at Kist Bank five months ago. Nepal Rastra Bank (NRB), the central monetary authority, has urged the new team for quick recovery of loans.
A highly placed official of NRB said they were strictly monitoring loans of commercial banks having up to 3 percent NPL.
Nine of the 30 commercial banks in the country have more than 3 percent NPL. They are Grand Bank, Kumari Bank, Sunrise Bank, NCC Bank, Siddhartha Bank and Kist as well as three state-owned banks -- RBB, Nepal Bank Limited and Agricultural Development Bank Limited (ADBL).
Likewise, ADBL (Rs 3.5 billion), Kist Bank (Rs 3.4 billion), RBB (Rs 2.55), Nepal Bank (Rs 2.05 billion), Nabil Bank (Rs 1.58 billion), Himalayan Bank (Rs 1.29billion) and Global IME Bank (Rs 1.16 billion) have NPL of more than Rs 1 billion.
Rana said NPL of Himalayan Bank increased in the review period due to non-repayment of interest by National Trading Limited - a public enterprise - since the end of last fiscal year. Himalayan Bank has provided loan worth Rs 210 million to National Trading Limited.
Seventeen of the 30 commercial banks have loan portfolio less than Rs 26 billion.
Source: Republica
