December 9: The non-performing loans of majority of commercial banks have increased as the lockdown to curb coronavirus affected most of the businesses in the country.

The non-performing loans of 18 out of 27 commercial banks increased in the first quarter of the current fiscal year compared to the corresponding period of last FY.

However, the remaining nine commercial banks have kept the non-performing loans in check.

Bankers say that the non-performing loans could further increase as the individuals and businesses affected by coronavirus have not been able to pay the interest and installment and are unlikely to pay in bulk amount.

Bankers say that although they have given the defaulters affected by coronavirus some more time to pay the loan and interest, it will only pile up pressure later on.

“Sooner or later the borrowers will have to pay the interest and loan. If they do not pay now and pile up the amount, its impact will be seen in the non-performing loan,” said a banker requesting not to be named.

The state-owned Rastriya Banijya Bank has the highest amount of non-performing loan in the current fiscal year. The non-performing loan of RBB, which was 3.50 percent in the first quarter of last fiscal year, has increased to 4.10 percent this year.

CEO of Rastriya Banijya Bank Kiran Kumar Shrestha says they were expecting the NPL to rise because the businesses have not been able to operate smoothly and the borrowers are unable to pay the interest and installment. Shrestha says they are anticipating non-performing loan to increase further.

“The sectors most affected by Covid-19 haven’t paid their loans or interest. We have be lenient toward those who are affected by the pandemic and we cannot force them to pay the loan. This only risks further increasing NPL,” said Shrestha.

Another state-owned bank- Nepal Bank Limited- stands second in the list of banks with high non-performing loans. Nepal Bank has recorded 3.2 percent NPL in the first quarter of the current fiscal year. During the corresponding period of last FY, the banks NPL was 2.75 percent.

Similarly, the NPL of NMB Bank is 2.26 percent followed by Bank of Kathmandu (2.18 percent), Global IME Bank (1.83 percent), Sunrise Bank (1.58 percent), Kumari Bank (1.43 percent) and Century Bank (1.43 percent). The NPL of Nepal Bangladesh Bank is 1.97 percent.

Other banks which have recorded an increase in non-performing loans by 0.23 percentage points.

Meanwhile, other nine commercial banks have succeeded in reducing their NPL. Despite covid-19 crisis, NIC Asia Bank has maintained its non-performing loan at 0.40 percent in the third week of October. Likewise, other banks that have succeeded in lowering their NPL include Laxmi Bank (0.97 percent), Mega Bank (1.0 percent), Agriculture Development Bank (2.37 percent), Prabhu Bank (2.67 percent) and NCC Bank (2.83 percent).

General Manager of Himalayan Bank Sushil Joshi says that the relief given to the borrowers at present is certain to increase NPL because they will have to pay at once later on. It will have an impact on the bank’s distributable profit, says Joshi.