State-owned banks offer concessions for loan repayment

KATHMANDU:

To encourage repayment of old defaulted loans, all three state-run banks have of late announced concession packages targeting small borrowers.

Rastriya Banijya Bank (RBB) and Agricultural Development Bank Ltd (ADBL) have announced a range of concessions on outstanding principal and interest amount for small loans, giving loan defaulters an opportunity to clear their names. Nepal Bank Ltd (NBL) had announced similar discounts on outstanding amount a month back.

Any borrower from RBB who has defaulted on loans provided before mid-July, 2002, can use the current facility. The range of concessions is only offered to loans with principal ranging from Rs 100,000 to Rs four million.

According to RBB, borrowers with principal amount less than Rs 100,000 can pay outstanding principal and 20 per cent of the interest amount and clear their names. The range of additional amount to be paid is based on the amount of principal with highest being Rs four million, for which defaulters can pay double the outstanding amount excluding compounded interest.

“We hope that borrowers will take this opportunity to repay their loans at discounted rates and clear their names,” said CEO

of RBB, Krishna Prasad Sharma.

The concession is valid till the end of the current fiscal year and will not be provided to defaulted loans whose collateral has been auctioned off.

“There is an outstanding of about Rs 600 million that needs to be recovered from defaulted loans and such schemes will help the bank recover a portion of it,” he added.

Likewise, ADBL has offered the concession on interest and principal repayment for the defaulted loans that was obtained before mid-July, 2008. The bank will waive the outstanding interest of the loans below Rs 30,000 if the borrower repays. Likewise, for loans of up to Rs 100,000, borrowers will avail 90 per cent concession on the interest on the payment of principal amount. Moreover, borrowers who have taken loans of up to Rs one million before July, 2008, can pay an interest equal to the outstanding principal.

Back in March, NBL had offered similar concessions to defaulters who had borrowed up to Rs 2.5 million prior to mid-April, 2002.

The state-run banks have been struggling with the burden of bad loans for more than a decade. All the three banks had undergone a decade-long Financial Sector Restructuring Programme since 2001. Despite the programme ending in 2011, the portion of non-performing loans of these banks is still above five per cent of total loans.

Source: THT