Kathmandu. The number of borrowers on the blacklist has increased rapidly due to the tightening of loan recovery by banks and financial institutions, and its impact is now visible in the overall economy. Investment through the banking system has slowed down and the expansion of the private sector has also been affected as the base of creditable customers has shrunk. In view of this situation, Nepal Rastra Bank is preparing to bring flexibility in the provision related to blacklisting. <\/p>\n
According to the Credit Information Center, the current fiscal year 2082. The number of blacklisted borrowers has reached 1,41,075 as of mid-March 2018. Last fiscal year 2081. At the end of ’82, the number was 129,947, which increased significantly in the first eight months of the current fiscal year. During the period, 35,578 new borrowers were added to the blacklist. This indicates increased risk within the financial system. <\/p>\n
The slowdown in economic activity, reduced demand in the market, slowdown in the construction and trade sectors, and decreasing repayment capacity of borrowers have created this situation. <\/p>\n
As the number of blacklisted people increases, its impact is not limited to those borrowers but is being seen in the entire credit cycle. The blacklisted individuals, firms or companies are barred from taking new loans, opening accounts or expanding their businesses. As a result, businesses are unable to reinvest. This is having a negative impact on production, employment and overall economic activity. <\/p>\n
The ‘Macroeconomic Report’ of the Nepal Rastra Bank has also stated that credit expansion has weakened due to the increase in the number of blacklisted entrepreneurs. In the midst of such pressure, the central bank seems to be leaning towards the conclusion that ‘strictness’ is not the only solution. <\/p>\n
According to the temporary relief system implemented last year, the borrower was given the facility to recover the arrears by removing the borrower from the blacklist for 6 months if they made a commitment to repay the loan by showing good reason. After this provision, the number of people coming out of the blacklist has also increased significantly. In the last fiscal year, 14,424 people were blacklisted, while 11,101 people have been blacklisted in the first eight months of the current fiscal year. This shows a positive sign of flexible policy. <\/p>\n
Discussions are currently underway within the Nepal Rastra Bank to further revise this provision and make it more effective. According to sources, the relief measures are being brought especially targeting the hardest-hit sectors such as construction, small and medium enterprises and the business sector. It is expected that this will help bring back borrowers who are temporarily in trouble but are able to run a business. <\/p>\n
Governor Bishwanath Poudel, in a recent program, had said that it was not possible to improve the economy and expand credit by tightening the country. He said that the system of blacklisting cheques as soon as they are dishonored is very stringent and needs to be reformed. This shows that attitudes are changing at the policy-making level as well. <\/p>\n
As per the current provision, banks and financial institutions have the right to recommend blacklisting borrowers with loans of Rs 10 lakh or more. If the principal or interest of the loan is delayed by more than a year, then the loan misuse, cheque dishonor, the borrower’s disappearance or bankruptcy are also the grounds for blacklisting. However, it is being analyzed that this tightening has now led to more ‘debt contraction’ than ‘defaulter control’. <\/p>\n
The central bank is now looking for a balance, saying that keeping a large number of borrowers out of the financial system at a time when the economy is slowing down could be counterproductive in the long run.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The number of borrowers on the blacklist has increased rapidly due to the tightening of loan recovery by banks and financial institutions, and its impact is now visible in the overall economy. Investment through the banking system has slowed down and the expansion of the private sector has also been affected as the base […]<\/p>\n","protected":false},"author":16,"featured_media":229318,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45117,45031,45159],"tags":[],"class_list":["post-292819","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-finance-en","category-banner-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/292819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=292819"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/292819\/revisions"}],"predecessor-version":[{"id":292820,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/292819\/revisions\/292820"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/229318"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=292819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=292819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=292819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}