Major state-owned banks and financial institutions ( BFIs ) are having a hard time recovering old loans even though they have been restructured.
The loan given to Pokhara-based Fulbari Hotel by a consortium led by Nepal Bank has remained unpaid for the last one year although it has been restructured and the consortium partners had been assured that it would be repaid under the revised repayment schedule.
A consortium led by Nepal Bank had extended credit worth Rs 1.28 billion to Fulbari to construct a five-star hotel in Pokhara, and the flow of loans had started from October 1994 with a repayment period of seven years. Other members of the consortium are Rastriya Banijya Bank (RBB), Employees Provident Fund (EPF) and NIDC Development Bank.
“Initially, the borrower Amatya Group had been making repayments as per the schedule,” said Kiran Kumar Shrestha, acting general manager of Nepal Bank. “However, it has not done so since the last one year.” He added that the consortium partners were discussing how to move ahead. The Fulbari loan is the largest loan for the consortium partners.
Meanwhile, another loan issued to Mount Everest Brewery promoted by the same group has also remained unpaid for the last six months. The consortium had extended a sum of over Rs 300 million to the company. Various companies including Mount Everest Brewery promoted by the group besides the individual promoters have been put in the Credit Information Bureau’s blacklist.
Similarly, another consortium loan that went to Mahalaxmi Sugar Mill is not being recovered smoothly. “After restructuring the loan two years ago, the loanee Birendra Kanaudiya has been making repayments, but they have been lower than what had been promised,” said Krishna Prasad Sharma, chief executive officer of Rastriya Banijya Bank, the lead bank in the consortium.
The group has provided over Rs 330 million to the sugar mill. Kanaudiya was removed from the blacklist after he agreed to repay the loan.
He had initially paid Rs 100 million to be removed from the blacklist.
Another big defaulter is Arun Chand of Basuling Sugar Mill. He had taken loans worth Rs 580 million from a consortium consisting of the Agricultural Development Bank Limited (ADBL), Nepal Bank, RBB, NIDC and the EPF. There has not been any payment from Chand although the principal and the interest accumulated have crossed Rs 1.5 billion. Chand is a son of former prime minister Lokendra Bahadur Chand.
Troubled public enterprises (PEs) have also defaulted loans. “We are yet to get repayment of loans that went to Himal Cement Factory and Janakpur Cigarette Factory both of which are currently closed,” said Shrestha of Nepal Bank.
According to him, the cigarette factory which has been closed for the last one and a half years stopped making repayments nine months ago. Nepal Bank has lent around Rs 300 million to the state-owned factory. The loan issued to Himal Cement was extended by a consortium led by NIDC Development Bank.
Source: The Kathmandu Post
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