The state-run banks have announced concession packages for small borrowers to encourage them repay of old defaulted loans.
Rastriya Banijya Bank (RBB) and Agricultural Development Bank (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. Likewise, Nepal Bank Ltd (NBL) had also announced similar discounts on outstanding amount a month back.
Any borrower from Rastriya Banijya Bank, who has defaulted on loans – of principal ranging from Rs 100,000 to Rs 4 million – provided before mid-July 2002, can use the current facility till the end of current fiscal year.
Borrowers with principal amount less than Rs 100,000 can pay outstanding principal and 20 per cent of the interest amount and clear their dues, it said, adding that the range of additional amount to be paid is based on the amount of principal with highest being Rs 4 million, for which defaulters can pay double the outstanding amount excluding compounded interest.
Rastriya Banijya Bank has an outstanding of about Rs 600 million defaulted loans.
Likewise, Agricultural Development Bank has offered the concession on interest and principal repayment for the defaulted loans that was obtained before mid-July, 2008.
Agricultural Development Bank will waive the outstanding interest of the loans below Rs 30,000, if the borrower repays. Likewise, borrowers will avail 90 per cent concession on the interest on the payment of principal amount for loans of up to Rs 100,000. “Borrowers, who have taken loans of up to Rs 1 million before July, 2008, can pay an interest equal to the outstanding principal.
A month ago in March, Nepal Bank had also offered concessions to defaulters who had borrowed up to Rs 2.5 million before mid-April, 2002.
The state-run banks have been struggling with the burden of bad loans – for more than a decade – that has weakened these financial institutions forcing the development partners to send them to reform a decade ago with 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.