Himalayan News Service

Kathmandu, May 21:

With an overwhelming response to NIC Bank’s new house loan scheme, Shashin Joshi, chief executive officer, is keen to bring more innovative products by creating a niche market for consumer finance. “We were planning to bring something unique and innovative. Since there is already a cutthroat competition in consumer lending sector, it was a ‘compulsion’ for us to bring such a product that could make possible for middle-class Nepali’s dream of living in one’s own house come true,” says Joshi. The bank has already received query from more than 500 potential customers and 10 per cent of them are already in a process to get loan within last two weeks. “Response is quite good,” he adds. NIC Bank launched the house loan scheme at an interest rate of 7.49 per cent per annum for new customers and 6.99 per cent for the first year in terms of refinancing the existing loans. These rates are among the lowest in comparison to the available interest rates in the same category in the market.

“Being a medium-sized commercial bank, where risks are very high while entering the ever-growing market with competitive products, we brought this new scheme to cater the needs of middle-class populace taking into consideration of their income and expense pattern,” Joshi says. The bank will finance up to 110 per cent of the total cost to construct a new house, with 100 per cent as construction cost and remaining 10 per cent for furnishing, decoration and purchase of household equipment. The NIC Ghar Subidha customers will also be eligible for loans, if a clean track record of timely repayment is demonstrated. Such customers will be eligible to get vehicle loan, education and personal loan and travel loan without additional collateral. Deteriorating investment climate due to political instability and increasing liquidity of the commercial banks are some major factor that made consumer financing more viable. The commercial banks are one after another floating such new schemes at competitive interest rates.

“Though profit margin is very tight, such a product is aimed at sustaining bank-consumer relations,” he revealed, “Present boom in short-term lending and switching for retail segment is a part of portfolio diversification, as well as a safe investment avenue.” NIC Bank plans to expand its lending portfolio by 20 per cent in retail lending. Joshi said NIC Bank is on regular growth path for last two years with an average annual growth of 50 per cent in its operating profit. He claimed that a steady growth is mainly due to strengthened efficiency and enhanced productivity along with effective cost control. The bank has posted a growth in operating profit by 40 per cent in the first 10 months of the current fiscal year. It has posted a hike in profit by Rs 168 million till mid-May, while its deposits base has touched Rs 6000 million. the bank has so far invested Rs 4730 million. NIC Bank will continue to bring such innovative products and schemes to meet the needs of customers. The portfolio diversification in both lending and deposit will be on with an emphasis on individual depositors base expansion. “A niche market is always there. What we need is innovative as well as inclusive products to cater the needs of our customers. For this, NIC Bank’s journey has just begun,” Joshi sums up.