NRB prohibits CIBs from auctioning collateral from defaulting borrowers for up to six months – myRepublica

KATHMANDU, October 11: The Nepal Rastra Bank (NRB) has instructed the Bank and Financial Institutions (BFI) to auction the collateral assets of these borrowers only if the loan amount remains in arrears for six months and more.

Revising the unified guidelines on Monday, the central bank proposed the provision aimed at giving relief to borrowers who have been hit hard by the COVID-19 pandemic. Currently, many BFIs auction off debtors’ assets even when payment is only delayed for a month.

Also a few months ago, NRB intervened in the Nepalese financial market after the discovery of several CIBs threatening borrowers to make their profiles public in daily newspapers or to blacklist them as defaulters. In the new provision, the supreme monetary authority allowed CIBs to launch auctions only if the loans fall into the “impaired” category.

Likewise, the central bank has revised the list of companies heavily affected by the pandemic. Private and residential schools, upper secondary schools, colleges and universities, vocational training institutes, preschools and day care centers have been included in the new list.

Similarly, ground transportation, beauty salons, cosmetic surgery and related businesses, consulting firms, health centers and fitness centers were also considered a highly affected category. Previously, NRB had enrolled these companies in the medium-level affected group.

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