Kathmandu. Nepal Rastra Bank also set the growth rate of loans to the private sector at 11.5 percent through the monetary policy of the current fiscal year 2080/81. Before that, the banks which were aggressively expanding their business got a bit hesitant after that policy and started to 'think-understand' the business. Due to this reason, the growth rate of loans flowing to the private sector is only 4.9 percent till January of the current financial year.

Currently, the bad loan ratio of most banks is above 4 percent. At present, the borrowers are unable to get loans because the banks are focusing on debt recovery rather than new loans. The National Bank has made a policy to maintain a 1.25 percent loss provision even for good loans. Bankers say that this has also created pressure on banks.

Currently, especially half a dozen commercial banks are under the pressure of primary capital fund. According to the data till mid-December of the current financial year, Kumari, Prabhu, Machhapuchhre, Himalayan, Nabil and NIC Asia Bank are under great pressure of capital funds. Due to the pressure of capital fund, these banks are not able to invest loans. Bankers share the experience that they have to look at the face of the borrower 10 times if they have to invest some loans.

According to the data provided by the National Bank, Kumari Bank has 8.03 percent, Prabhu's 8.12 percent, Machhapuchhre's 8.66 percent, Himalayan's 8.70 percent, Nabil's 8.93 percent and NIC Asia Bank's 9.04 percent capital fund.

Other banks have more than 9 percent. Nepal Rastra Bank has made a policy to raise the current 8.5 percent primary capital fund to 9 percent after next June. After that, they will face the problem of capital fund, and it seems that the 7 commercial banks, which are currently in a comfortable situation, will also be under pressure. Seven commercial banks will be in a comfortable situation even if they continue their business at this ratio.

Currently, banks with 8.5 percent less capital fund will not be allowed to distribute this year's dividend in the next year as well. Because Nepal Rastra Bank prohibits the distribution of dividends to banks that cannot maintain capital funds.

Assistant Information Officer of Nepal Rastra Bank Bhagwat Acharya says that the Rastra Bank is monitoring the banks with low capital fund. According to him, although not all banks are under the pressure of the capital fund, some of them are under some pressure. However, he argues that the flow of loans has slowed down because there is no demand for loans from customers.