Kathmandu, August 25 :

Parliamentary Public Accounts Committee (PAC) today called governor of the Nepal Rastra Bank (NRB), including the senior officials of Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB), to take stock of the status of financial sector reform process and the increased defaulted loans by some of the big borrowers.

Chitra Bahadur KC, chairman of the PAC raised serious concerns on the increased non-performing loans that goes in billions. Governor Bijay Nath Bhattarai informed PAC that the reform has been started in two banks, RBB and NBL, with the financial help from World Bank due to weak institutional system, weak accounting system and negative net worth. The financial sector reform is moving slowly, but on the right track. “Both, NBL and RBB, is generating profit and operating according to the guidelines by the NRB,” Bhattarai replied to the parliamentary committee.

“The reform teams of these two banks have made their policies to effectively reduce non-performing assets (NPAs). Similarly, NRB is under re-engineering process to strengthen its supervisory capacity and credit information system,” he informed.

Dr Bhola Nath Chalise, chairman of the board of RBB, said that recruitment of foreign experts has brought productive results to the reform process as they have easily shouldered the pressures from different quarters. Chalise, however, termed Nepal as a ‘borrowers’ paradise’.

Surendra Man Pradhan, executive director of NRB said that reform process has helped to prevent two banks from financial troubles. “NBL and RBB have already started automation to make the service delivery effective. RBB has recovered Rs 8.91 billion from non-performing loans and NBL has recovered Rs 6.80 from NPLs,” he told the PAC.

N P Saud, MP of NC (D) asked NRB the reasons for its inability in monitoring loan repayment.

Tek Bahadur Chokyal, MP of NC (D) raised serious concerns on the misuse of state-owned banks’ money. “NBL and RBB would be privatised ‘strategically’, which is the initial plan of the financial sector reform. However, the government has to inject Rs 25 billion to privatise these two banks,” governor said.

The MPs also querried about the Malaxmi Sugar Mills and its due loans. Janardan Acharya, COO of RBB raised concerns over the pact between Binod Chaudhary, president of Chaudhary Group and Birendra Kanaudia and the transfer of shares without the consent of consortium bankers. Acharya said the PAC that Chaudhary Group cannot escape from the liabilities as the loan was issued to the personal guarantee of Binod Chaudhary and Chaudhary Group.

Few days ago, finance minister Dr Ram Sharan Mahat had disclosed that the outstanding loa-ns had crossed over Rs 28 billion. The time period given by him to reschedule or clear the loans is left less than a month only.