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Bankers have said that in recent months, banks are under pressure to expand loans and recover. They say that even though the interest rate is continuously decreasing, the interest gap (spread) between loans and deposits is narrowing, there is difficulty in loan expansion and loan recovery.
In a press conference organized by the Nepal Bankers Association on Tuesday to inform about the current situation of the financial sector, the bankers said that they now need policy ease.
Chief Executive Officer of Nepal Bankers Association, Anil Sharma, while presenting the working paper, said that since there has been excess liquidity in the financial system for a long time, it is difficult to expand credit even at a time when the spread rate is narrowing.
Bankers Association Vice President and Global IME Bank Chief Executive Officer Surendraraj Regmi emphasized that the regulatory body should be flexible in that policy arrangement for some time as the capital funds maintained by banks are about 2/3 percentage points more than the international standards.
'Rashtra Bank should be flexible in the capital funding system in the current complex situation,' he says, 'Even now, we are keeping 2 to 3 percent higher capital funding ratio than international banks. Therefore, in a difficult situation, the National Bank should make some easy arrangements.'
Regmi says that there is no need to panic even if the bad loans of banks increase slightly in the second quarter. "Although the bad loans of the banks are above 4 percent, there is no need to panic because the net bad loans are less than 3 percent," he said. In the last five months, when the credit expansion from the banks did not increase as expected, last December, more than 90 billion loans were extended from the commercial banks alone. However, he said that the loan has decreased by 20 billion rupees in the first week of January, so there is doubt about the sustainable expansion of the loan.
While the banks themselves are facing difficulties, the activities against banking have added more problems, said Santosh Koirala, president of the Nepal Bankers Association.
'Recently, some groups have been assaulting bank employees who go for debt recovery. But the security and support from the local level has not been received as expected, Koirala said, due to the increase in bad loans, failure to expand loans and recovery as expected, the financial condition of the banks is a direct indication that the state of the economy is not good.
The financial situation of the bank has been affected due to various reasons due to the economic situation, loan demand not increasing, due to the pressure on loan recovery, he said.
