Kathmandu. Question have raised the financial statements recently published by banks and financial institutions of Nepal . The CEO of a commercial bank says, “Bankers, the National Bank and journalists are also clear that the financial statements published now are white lies. But this has become acceptable.”

The banking sector has been accused of hiding real data about the business and profits of private companies for years. This is why old bankers always complained that banks had to make loans based on ‘false’ financial statements. Later, the government brought new rules that the financial statements submitted to the tax office and the bank should be the same. Many bankers had not stopped seeing ‘problems’ in the statements prepared in this way. But now those same bankers are openly admitting that they printed false financial statements.

Karnali Development Bank published its first quarterly financial statement on November 12, 2002. The statement, which covers the situation from Shrawan 2081 to mid-Asoj, stated that the bank's non-performing loans had reached 7.27 percent.

However, a month after the statement was published, on November 11, Nepal Rastra Bank took 'immediate corrective action', stating that its non-performing loan ratio was 40.85 percent.

Another interesting thing is that the non-performing loan ratio, which has reached 41 percent, is not reported from the data after Asoj, but from the targeted inspection conducted by the central bank from July 6 to 11. In other words, this statement should have been visible in mid-Asoj.

But at that time, the bank had said that its non-performing loans were only 7 percent. This is an example to show how close or far from reality the financial statements published by our banks are.

The fact that the data was deliberately distorted by evergreening loans has now become an ‘open secret’. Dinesh Acharya, Chairman of Capital Management and Research Center and Executive Chairman of Elite Capital, has raised questions about this on social media.

He wrote, “Looking at the financial statements of banks, it is clear that there has been tampering with the bad loan data. It is difficult to say how much will be corrected in the audit report.”

Bhuwan Dahal, former Chairman of the Nepal Bankers Association and Chairman of Financial Literacy Nepal, wrote an article in Clickmandu a year ago, presenting the fact that even the reports of mid-Ashar may not be reliable. In that article, he revealed that the profit and risk management figures published by some banks and in the reports after external audit differed widely.

Even now, bankers and bank directors say that if the existing legal and regulatory provisions are fully complied with and the data is shown without any tampering, the ratio of non-performing loans of commercial banks could reach around 25 percent.

Former banker Parashuram Kunwar Chhetri has written on the social network Facebook, - 'In PUS 2081, the monthly loan growth of banks and financial institutions was Rs. 103 billion. This growth is the highest in the past 38 months.' He has previously said that the largest loan expansion occurred in PUS after an increase of Rs. 1042 billion in Asoj 2078.

According to Nepal Rastra Bank, all banks and financial institutions had disbursed loans of Rs. 5167 billion by mid-Mansir. By the end of last Monday, i.e. the first week of Magh, this amount has increased to Rs. 5410 billion. Thus, it seems that loans have increased by Rs. 243 billion, or almost 5 percent, in five weeks.

In the new financial reports, the average non-performing loan rate of 20 commercial banks is less than 4.49 percent. But bankers say, "If there had been honest reporting, this ratio could have increased four to five times."