Commercial Banks Start Filtering Borrowers amid Increased Bad Debt

Jan 31, 2023 01:19 PM Merolagani

Commercial banks have started filtering borrowers amid increased bad debts.

The banks recorded 1.24 percent growth in bad debt by the end of the second quarter of the current FY compared to the corresponding period of the last FY.

Krishna Bahadur Adhikari, CEO of Nepal Bank informed that the banks are paying close attention while extending loans. “Due to the increase in bad debts, the banks are extending loans by filtering the loans seekers,” he said.

Contrary to the previous scenario, the banks now have enough investable fund. As per NRB, the banks have a loanable fund of Rs 184 billion, however, the banks have tightened their loan extension following the huge increase in bad debts.

As per the second quarter financial reports published by the banks, the bad debts of the banks increased by Rs 54.5 billion in the last one year. The banks logged bad debt of nearly Rs 100 billion which is 2.35 percent of their total loan extension of Rs 4271 billion.

Meanwhile, the banks had bad debt of just Rs 45.82 billion in the review period of the last FY. the bad debt was 1.32 percent of their total loan extension of Rs 4128 billion.

Therefore, the banks have started tightening their loan extension.

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