25 billion more risk provision of banks and financial institutions of Nepal

Mar Thu 2023 02:35:31

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25 billion more risk provision of banks and financial institutions of Nepal

Kathmandu. As the bad loans of banks and financial institutions have increased, the amount of provision made for them has also increased. By the end of poush 2079/80, commercial banks, development banks, finance companies and microfinance institutions Institutions have managed a total of 45 billion 31 million rupees for risk management (rex provision).

In the last one year, the amount of provision for risk of banks and financial institutions has increased by 130 percent. It is 25 billion 61 million 10 lakh rupees more than last year till mid-January.

The data received from Nepal Rastra Bank up to the end of January of the current financial year 2079/80 shows this. By the end of January last year, banks and financial institutions had made a provision of 19 billion 702 million rupees for risks.

This situation has happened especially when the bad loans of banks have increased. Banks have to provide a separate amount for bad loans. An official of Rashtra Bank said that due to various reasons, the provision amount has also increased due to the increase in banks' bad loans. In the total provision for risk, most of the provision is for bad loans.

Commercial bank's RICS provision reached 29.5 billion 

By the end of January of the current year, the commercial banks' RICS provision alone is more than 29 and a half billion. During the period under review, commercial banks' RICS provision has reached 29 billion 52 crore rupees.

Which is 131 percent more than the same period last year. Until the end of January last year, commercial banks had made a provision of 12 billion 78 million 10 million rupees for risk. During the review period, development banks have kept an amount equal to 4.38 billion rupees and finance companies 93.2 million rupees as provisions for risk.

During the review period of last year, Bikas Bank had provision for risk equal to 2.36 billion rupees, 4.8 billion rupees by finance companies and 4.7 billion rupees by microfinance institutions.

Due to the recent economic crisis, the loans of the banks have not been recovered. Demand in the market has decreased due to high prices, high interest rates, etc. As a result, there has been a decline in most of the businesses. As a result of the decline in business, the borrowers have not been able to pay the bank loans. Then such loans are classified as bad loans. According to the regulations of the National Bank, a separate provision should be made for such loans. Then the banks made such a provision from their profits.