Kathmandu: The internal economy is still sluggish. Its impact is also affecting banks and financial institutions. Banks have not been aggressively disbursing loans and loan recovery has not been effective. As a result, bad loans of banks and financial institutions are increasing. Although banks and financial institutions have adopted various strategies to reduce non-performing loans, they have not been very successful. As a result, the data of the Central Bank shows that non-performing loans are increasing.

A report of Nepal Rastra Bank (NRB) shows that the bad debt of banks had soared to 3.89 percent of their total loan portfolio by mid-April. The ratio dropped to 3.76 percent as of mid-July of the fiscal year 2023/24.

In the first month of the current financial year, the average bad loans of banks and financial institutions is 3.86 percent. By the end of July, banks and financial institutions had provided loans of 51 trillion 65 billion rupees. Based on this data, bad loans of banks and financial institutions are more than 1 trillion 99 billion rupees.

By the end of July last year, the average bad loan ratio of banks and financial institutions was 3.02 percent. During that period, banks and financial institutions provided loans of 48 trillion 57 billion rupees. This shows that banks and financial institutions have non-performing loans of 1 trillion 46 billion rupees at that time. Based on this data, non-performing loans of banks and financial institutions are 52.68 billion rupees more than the same period of the last financial year.

During this period, non-performing loans of commercial banks are 3.76 percent. In July last year, the average non-performing loan of commercial banks was 2.98 percent. Non-performing loans increased by 0.78 percentage points in 1 year.

As of the end of July of the current financial year, the average non-performing loan of commercial banks is 3.62 percent. By the end of last year, the average non-performing loan of development banks was 2.49 percent. The average non-performing loans of development banks increased by 1.13 percentage points.

As of mid-July of the current financial year, the average non-performing loan of finance companies is 9.87 percent. Last July, the average non-performing loan of finance companies was 7.60 percent. In 1 year, non-performing loans of finance companies increased by 2.27 percentage points on average.