Nepal Today

Tuesday, June 4, 2013

KAMALERIS CONTINUE TERAI BANDH FOR SECOND DAY WEDNESDAY Kathmandu, 5 June: Kalaleris closed down 22 terai districts for the second day Wednesday. The former child Tharu workers saying excesses continue against them, including murder, announced indefinite closure in the south Tuesday. They have been staging extended protests in the capital as well. nnnn RBB, NBL ATTEMPT TO RECOVER BAD LOANS Kathmandu, 5 June: Rastriya Banijya Bank (RBB) and Nepal Bank Limited (NBL) have started a recovery drive for loans defaulted before 2002 when the Financial Reform Programme was implemented at these two banks, Prithvi Man Shrestha writes in The Kathmandu Post.. Due to large-scale non-payment of loans, these two old banks nearly went belly up. Nepal Rastra Bank (NRB) had to step in and take over their management and implement reform measures. The government took loans worth Rs 7 billion from the World Bank to implement the reform programme. RBB has started a special drive to recover loans worth more than Rs 10 million while NBL has offered a special discount on loans valued at up to Rs 2.5 million. The two banks have set the end of this fiscal year as the deadline to repay the loans. Bank officials said that they had to launch a recovery drive as the outstanding loans added up to a very large sum even though they had been written off in the balance sheet. As per the central bank’s directive, banks have to write off loans that are more than five years old, however, they have to recover them. According to RBB and NBL officials, the principal amounts of their outstanding loans amount to Rs 6.75 billion and Rs 2 billion respectively and they were defaulted before 2002. RBB said it has to collect interest worth Rs 32 billion. The failure of RBB and NBL to recover old loans has invited a sarcastic comment from NRB governor Yubaraj Khatiwada. Speaking at an interaction held at the Finance Ministry on Sunday, he said that the two banks seemed to have swelled up due to illness while looking at their balance sheets in which the old defaulted loans had been written off. Meanwhile, in a bid to speed up the recovery process, RBB has formed a committee headed by a board director to communicate with the debtors owing more than Rs 10 million. The committee will also suggest measures to recover the money. Two board directors, deputy general managers and legal experts are on the committee, according to the bank. According to RBB, defaulted loans worth more than Rs 10 million add up to Rs 4 billion. The number of defaulters of such loans is 60. RBB CEO Krishna Prasad Sharma said that the committee was expected make its recommendations in two to three weeks, and the bank would launch its recovery drive based on its advice. Among the bank’s large debtors are the Mangaturam Group, Amatya Group, Momento Apparel, Kirant Group, Bashuling Sugar Mill, Bhrikuti Pulp and Paper Factory, Anupam Foods and Samyam Vegetables. Meanwhile, NBL has offered a discount on the interest owed according to the amount of the defaulted loan. Debtors are required to pay only 40 percent of the outstanding interest if the defaulted loan is worth less than Rs 100,000. In case of loans worth from Rs 2 to Rs 2.5 million, the bank has asked that debtors only pay the principal amount and an equal amount as interest. NBL general manager Kiran Kumar Shrestha said that the recovery drive had been initiated to recover as much of the old loans as possible before the fiscal year ends to help strengthen the bank’s financial situation. Major loan defaulters of NBL are the Sahani Group, Lohani Group, Bashuling Sugar Mill (which has borrowed money from a consortium led by the Agricultural Development Bank) and Amatya Group. Nnnn EXIM BANNK OF INDIA OFFERS $155M SOFT LOAN Kathmandu, 5 June: EXIM Bank of India has finally approved three projects — Rahughat Hydropower Project, Koshi Corridor Transmission Line Project and Solu Corridor Transmission Line Project — for its soft loan support worth $155 million. The Ministry of Finance (MoF) received a formal letter from the bank on Monday, Ashok Thapa writes in The Kathmandu Post.. Madhu Marasini, chief of the international economic cooperation coordination division at the ministry, confirmed the receipt of the letter. “The Bank has approved the loan support to Nepal for the development of three projects,” he said. Marasini said the Indian bank has approved soft loans worth $36 million for 32-MW Rahughat Hydropower Project, $90 million for 220-kv Koshi Corridor Transmission Line Project and $29 million for 132kv Solu Corridor Transmission Line Project. Some two years ago, the government had requested the Indian EXIM Bank to provide $250 million in soft loans for the construction of 14 infrastructure projects, including hydropower, transmission lines and roads. A contract agreement between the government and the bank was signed on October 21, 2011, in New Delhi during the visit of the then Prime Minister Baburam Bhattarai. As per the agreement, India will provide long-term loans for 30 years at 1.75 percent interest. Although the credit agreement under the line of credit was scheduled to come into effect from June 29, 2012, the bank delayed releasing the amount after the Nepal government failed to submit the progress reports of the said 14 projects in time. The government submitted progress reports this year. The detailed project report of Modi-Lekhnath 132-KV Transmission Line, however, is yet to be submitted. “As the Indian bank is also processing other projects to release the loans, we will receive a notification soon,” Marasini said, adding his ministry will ask the Energy Ministry to submit details on when and how much amount does the latter require to finance these projects. “Once we forward the details to the bank, it will begin releasing the loans,” he said. Energy Secretary Hari Ram Koirala said the ministry will soon accelerate development of Rahughat project, while the Nepal Electricity Authority (NEA) will be asked to call a fresh tender to appoint constructors for the remaining two transmission line projects. Meanwhile, independent power projects expressed confidence about the construction of Solu and Koshi Corridor Transmission Line Projects. They said the NEA has not been able to sign Power Purchase Agreement (PPA) with more than 15 hydropower projects to be built in Solu and Koshi corridor due to uncertainty about construction of the transmission lines. “More than 15 projects are waiting for PPA with NEA although they are all set to enter the construction phase,” said Subarna Das Shrestha, president of the Independent Power Producers Association of Nepal. “We expect the NEA to begin the construction of transmission line projects with the loan amount which will give relief to project developers.” nnnn