Kathmandu, August 18:

Finance minister Dr Ram Sharan Mahat today disclosed that ‘outstanding loans’ to banks stand at Rs 28.73 billion, most of which belongs to Nepal Bank Ltd (NBL) and Rastriya Banijya Bank (RBB), the two largest commercial banks of Nepal.

Dr Mahat was presenting details of the ‘defaulted loans’ by some big borrowers to the Finance Committee of the House of Representatives (HoR) today. Clarifying on the queries of members of parliament, Dr Mahat said, “All borrowers are not wilful defaulters.” Those borrowers who are not paying back loans in spite of their capacity will face stern actions, Dr Mahat assured the finance committee meeting of HoR held here today.

Dr Dilli Raj Khanal, parliamentarian and member at finance committee expressed concerns that while small borrowers are forced and even sometimes tortured to repay loans, big loan defaulters are living a lavish life which is a shame for a poor country like Nepal.

Dr Khanal observed that if we could not take action against these loan defaulters, the economy would collapse. The government has to seize the passports of big defaulters and initiate social boycott that may compel them to repay defaulted bank loans as the money deposited in banks belong to poor people.

Employees of banks are also responsible for outstanding loans and they also need to be brought to the book and action initiated against them, Khanal demanded. He urged the government to recover loans from ‘wilful defaulters’ as they have taken huge loans from banks and have not paid back deliberately.

Finance minister Dr Mahat expressed his views that the government is adopting a ‘carrot and stick’ policy to recover banks’ outstanding loans. He said big borrowers who have outstanding loans are given some ‘grace time’ that is a month to repay the loans. If they can not negotiate with banks and clear their loans as per the given time, the government would even seize their passports, Dr Mahat assured the finance committee.

He also hinted that due to extortion and donation issues, capital flight has started. However, he did not indicate how much money has been siphoned out of the country. Small borrowers, according to Dr Mahat, have been given a chance to clear their loans and NBL and RBB have already started giving some concession to these borrowers.

Dr Mahat, while clarifying the queries of member of finance committee, said that ‘no defaulter’ has got political protection.

Dr Khanal said that the leadership at NRB has been found very weak which has created trouble in the stock market and the financial sector.

Suresh Malla, Nepali Congress lawmaker said that there is no coordination between Nepal Rastra Bank (NRB), Nepal Stock Exchange Ltd (NEPSE) and Securities Board which has created trouble for the capital market. Loan defaulters and those responsible for releasing loans should be punished, Malla demanded.

Mahesh Acharya, NC lawmaker and former finance minister, blasted the central bank saying that it has made and released a monetary policy in an ad-hoc way that has sent a negative message to the stock market. Before announcing the monetary policy, NRB lacked consultations with concerned stakeholders, Acharya said. He also said that due to the few number of brokers involved in the stock market, manipulations have increased which has to be controlled and there should be a competitive environment in the market.

Finance minister Dr Mahat reiterated that NRB is an autonomous body and the government does not interfere with it. NRB should strengthen its regulatory power and work for reforming the financial sector, he stressed.