Operation Starts
After months of inaction, the government finally wakes up to take action against willful defaulters
By A CORRESPONDENT
Following months of nudging by the development partners like the World Bank, the government has finally decided to take action against willful defaulters of bank loans.
Although the cabinet had decided to take action against the defaulters much earlier, the Finance Ministry is now acting with renewed vigor.
The Ministry’s newfound zeal coincides with the visit by the World Bank Managing Director Graeme Wheeler.
The government has decided to implement the cabinet decision to impound passports of 80 blacklisted loan defaulters who have not paid Rs 12 billion in interest and principle and who are associated with 27 leading business groups.
The Finance Ministry sent formal letters to all concerned agencies on Sunday (February 18) regarding the action against defaulters.
The Ministry has written letters to the Foreign Affairs Ministry, Home Ministry, Land Reforms Ministry, Civil Aviation Authority and Nepal Rastra Bank, among others, specifying actions against the defaulters.
As per the decision of the cabinet, the passports of the defaulters have been annulled, assets frozen and their shares in financial institutions seized. Likewise, the facility of Commercially Important Person (CIP) has been withdrawn, and all other state-bestowed recognitions cancelled, according to Deep Basnyat, spokesperson at the Ministry.
The Finance Ministry has said that these actions could be withdrawn if the defaulters agree to reschedule their loan repayment with the concerned banks. “ Nepal government is compelled to take this action in order to keep the financial system alive and protect savings of common people,” the Ministry says in a statement.
The cabinet had, on December 2006, taken the decision of delegating authority to the Finance Ministry to take action against such defaulters. The Finance Ministry is said to have taken the decision on the basis of names recommended by six leading commercial banks through Nepal Rastra Bank. Nepal Bank Limited recommended names of 11 business groups for the passport seizure, while NIC Bank recommended six groups. Similarly, Rastriya Banijya Bank gave four names, Himalayan Bank recommended three, Lumbini Bank two and Nabil Bank recommended one for the same purpose.
The fixed assets of these defaulters will be frozen and they will be stopped from assuming the position of director or promoter of any company. The defaulters have also been disqualified from trading in treasury bills and savings certificates and from receiving medals and decorations conferred by the State.
However, blacklisted defaulters will be permitted to sell off fixed assets, including treasury bills and saving certificates for the purpose of servicing their outstanding financial liabilities.
