Kathmandu. Bad loans of commercial banks are increasing. It seems that the bad loans of some banks have reached above the limit. The third quarter financial statement of the current financial year published by the banks has shown this.

The bad loan ratio of banks is also increasing due to the recent economic slowdown. In the third quarter, the average bad loan ratio of banks reached 3.63 percent. However, in the same period of last year, the ratio of such loans was 3 percent less i.e. 2.98 percent. This ratio has increased by 0.65 percentage points compared to last year.

Even though economic activity has not increased, bad loans have increased. Because of the economic slackness, the loans of the banks have not been recovered. Due to the economic crisis, there has been a decline in the business income of most of the sectors, as a result of which the borrowers' ability to pay their debts has decreased. They are able to pay the loan installments and interest, this has increased the bad debt.

Banks' profits have also been affected by the increase in bad loans. Compared to last year, the profit of banks has decreased by half. Net profit of banks decreased by 13.47 percent to Rs 40.68 billion during the review period. However, until March last year, the banks made a profit of 47 billion 1 crore rupees. Due to the increase in bad loans, the distributable profit of most banks has also become negative.

Only Everest Bank has 1 percent less bad loans

Only Everest Bank has 1 percent less bad loans during the review period. The bad loan ratio of banks other than Everest is above 1 percent to 5 percent. In the third quarter, Everest's bad debt is only 0.7 percent. In the same period last year, the ratio of such bank loans was zero.7 percent. Sanima and Nepal SBI Bank, which are in the second and third list of least bad loans, have 1.49 percent and 1.98 percent respectively.

Similarly, during the review period, Standard Chartered Bank's bad loans were 2.14 percent, Siddharth's 2.52 percent, and NMB Bank's 2.86 percent. NIC Asia's bad loans, which were at a low level of 1 percentage point in the past years, have now reached 3.08 percent. During the review period, the share of Krishi Bikash Bank was 3.3 percent, Machhapuchhre was 3.68 percent and Citizens Bank was 3.76 percent.

Laxmi Sunrise's bad loans is highest

During the review period, the bad loans of nearly a dozen banks are above 4 percent. The highest is 5.49 percent of Laxmi Sunrise. Which is above the limit set by Nepal Rastra Bank. Similarly, bad loans of Nabil Bank are 4.04 percent, Prime 4.29 percent, National Commercial Bank 4.3 percent, Nepal Investment Mega Bank 4.66 percent, Global IME 4.74 percent, Prabhu 4.81 percent. On the other hand, Nepal Bank's bad loans are 4.85 percent, Kumari's 4.95 percent, and Himalayan Bank's 4.96 percent.