Poor implementation of verdicts affect debt recovery

KATHMANDU, Jan 29:

Though Debt Recovery Tribunal (DRT) has decided to recover Rs 40.967 billion from bank loan defaulters over the past nine years, it has managed to recover only 40 percent, or Rs16 billion.

The tribunal - a judicial body formed to try and settle cases on recovery of debts of BFIs -- had ordered to recover the amount while settling 2,429 cases filed by 40 banks and financial institutions (BFIs).

As per the existing provision, the tribunal recovers the amount through its debt recovery officers and provides it to the concerned BFIs. Officials of the tribunal said one of the main reasons behind the failure to recover all debts is the tendency of BFIs to issue loans without sufficient collateral and the guarantee of the guarantor. “In most of the cases we have settled, either the collateral was insufficient or loan was extended without evaluating the repayment capacity of the borrowers,” Rudra Prasad Subedi, registrar of the DRT, told Republica.

Though DRT can recover debt by selling other private properties of the borrower if collateral is insufficient, tracing such properties has become a tough nut to crack.
“When we ask BFIs to furnish details of collateral and other properties of the borrowers, they just can´t produce such details,” added Subedi.

Outgoing chairman of the tribunal, Gokul Prasad Burlakoti, said concerned efforts of all stakeholders, BFIs, land revenue offices, police and other state machineries, was necessary to implement the tribunal´s verdict. “There were several cases where the petitioning BFIs were less aware about the address and the property status of their borrowers,” Burlakoti said, adding, “In such circumstances, there would be problem in implementation of our verdict on recovering loans.”

According to the Nepal Rastra Bank (NRB), the non-performing loan (NPL) of commercial banks has come down to 3 percent as at mid-April 2013 down 28.68 percent recorded a decade ago.

“One of the reasons behind decline in the non-performing loan is demonstrative part of the tribunal,” registrar Subedi claimed.

Source: Republica