‘Restructuring of loans a must’

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KATHMANDU, Dec 24 – Top banking officials have stressed the need of immediate restructuring of the loan investments in the export and tourism sector. They also informed that the commercial banks are waiting for a green signal from the central bank to initiate steps in the same direction.

Addressing a press conference here on Monday, Narendra Bhattarai, President of Nepal Bankers Association and Managing Director of the Nepal Bangladesh Bank (NBB) said that the restructuring of the loan and advances of the service and export oriented industries is the need of hour.

"Since there is high possibility of revival of these industries in days to come, commercial banks are ready to take steps to lessen the financial burden of these industries, which has loan burden of around Rs 22 billion," Bhattarai said.

Referring to the flexible monetary steps announced recently by the Nepal Rastra Bank, he opined that the measures are positive and can contribute to shore up the ailing economy. However, he said that it would not be realistic to expect a drastic change in the near future. "Despite the increase in the liquidity of the banking system, lack of potential and credible borrows is the main contemporary problem of the banks and it will take time to improve the situation," he added.

When asked to comment on the possibility on the further relaxation of the monetary measures, he opined that the central bank should conduct a detail study on the impact of the recent measures before taking any further steps. "It should carefully examine to what extent the newly released capital of Rs 1.80 billion from the commercial banks has been able to boost the ailing productive sector."

He also ruled out any immediate impact on the deposit interest rates by the new monetary measures of the central bank.

Meanwhile, the Board Meeting of the NBB held recently has decided to submit a proposal of distributing five percent dividends along with 2:1 bonus share to its shareholders in the upcoming 7th annual general meeting of the bank. It also decided to initiate necessary steps for the approval of the proposal from the central bank.

According to a press release distributed at the programme, the capital base of the bank has reached Rs 561.6 million. The central bank had issued a directive to all the commercial banks to raise their capital base by Rs 500 million by the end of last fiscal year.

The total deposit of the bank, by the end of last fiscal year, reached Rs 8.60 billion whereas the overall investments were Rs 6.98 billion. The net profit of the bank, during the period surged to Rs 198.7 million against Rs 139.5 million accrued last year.

Banks not to invest in hotels

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POKHARA, Dec 24 - Commercial banks here have said that they are not going to invest in hotels and resorts in Pokhara at a time when the tourism industry is passing through a survival crisis.

Banks say that they are not in a position to invest in the local hotels, as there has been recession in the tourism industry, which has made it very difficult for the hotels to repay loans.

"The recession in the tourism industry has adversely affected both big and small hotels here. Now there is no business in the hotel and to invest in hotels in such a condition is to lose money," says Mesh Karki, manager at the Standard Chartered Bank, Pokhara branch.

Over 30 per cent of the hotels here are financed by various banks including the Agricultural Development Bank and Nepal Industrial Development Corporation (NIDC).

About 25 per cent of such financed hotels have not been able to repay their loans and some of the banks have issued notice to auction some of the property of such hotels.

There are altogether 282 hotels in Pokhara, opened especially targeting foreign tourists. However, tourist arrival in Pokhara has dipped to less than 50 persons a day, according Regional Tourism Office, Pokhara.

Sunder Shrestha, President of Regional Hotel Association emphasizes on promoting the running hotels rather than investing in new ones in such an unfavourable condition.

"It will not make any difference if banks do not invest in new hotels, but if they stop financing the hotels in operation in such a difficult situation, the ailing industry will not survive," said he.