Real Estate woes

KATHMANDU, JUN 12 -

Financial institutions (FIs) are seeking help of the Debt Recovery Tribunal (DRT) to recover loans from realty traders.

Sagarmatha Merchant Banking and Finance Company has become the first FI this year to seek such a help. Sagarmatha recently registered a case at DRT seeking its help to recover Rs 11.31 million that it lent to the estate traders — Bishnu Gurung of Maharajgunj, and Sarbadhan Rai — three years ago.

Gurung owes a total of Rs 10.21 million in two separate loans (Rs 6.77 million and Rs 3.44 million), while Rai has to pay Rs 1.1 million to the finance company. “It is the first time this year that any case related to the realty sector has been registered,” said DRT Registrar Rudra Prasad Subedi. “We expect the number to rise as the banking sector is facing difficulties in recovering realty loans.”

Not only Sagarmatha, the entire banking system is facing difficulties in recovering realty loans. “Recovery is still disappointing,” said Rajendra Man Shakya, president of the Finance Companies’ Association.

Even in commercial banks are facing a similar situation. “Recovery of realty loans has not been encouraging,” said BN Gharti, deputy general manager at KIST Bank, adding that loan recovery from small projects, however, is improving.

As of the first eight months of the current fiscal year, BFIs’ realty loan portfolio stands Rs 94.80 billion. Commercial banks have lent Rs 67.45 billion to the sector, while development banks and finance companies Rs 12 billion and Rs 15.32 billion, respectively, according to the Nepal Rastra Bank.

Source: The Kathmandu Post