Nabil Bank CEO Manoj Gyawali highlighted that the banking system is under pressure because the government has not been paying construction contractors on time.
Nabil Bank’s Chief Executive Officer (CEO), Manoj Gyawali, recently shared his concerns that the banking system is under significant pressure. This pressure comes because the government delays payment to construction businessmen for their work.
Speaking at a discussion about monetary policy in the Finance Committee of the House of Representatives on Sunday, CEO Gyawali warned of a growing risk. He explained that if construction contracts are frozen or payments are late, it could lead to more Non-Performing Loans (NPLs), which are basically bad debts, for banks. He also pointed out that banks has invested about five kharba rupees in the construction sector. Because of this large investment, he urged the government to address the issues faced by construction companies. He suggested that changes in the monetary policy could help make these payments easier.
Mr. Gyawali believes that if the government pays on time or allows for alternative arrangements like transferring contracts, it would make managing these loans much simpler. This would greatly reduce the pressure currently felt by the banking system. He also shared that banks pay approximately 38 arba rupees in income tax every year. However, the government’s failure to solve the problems of construction businesses is now hurting bank profits. This situation, he added, will directly affect the government’s own revenue collection.
In his own words, CEO Gyawali stated, “Today, the banking sector alone contributes nearly 13 percent of the total government revenue just through income tax. We pays 37 to 38 arba rupees annually in income tax, and this amount has been increasing. But right now, with various rules in place, banks are at risk of losing money. This will also impact the state’s income sources; if bankers lose money, the state itself will face problems. The current state of the construction industry has put the banking system under pressure. The state has not made payments. Construction businessmen are struggling, and if a situation arises where their contracts are stopped, banks will quickly receive claims. As of today, about five kharba rupees in loans are with this sector in the banking system. This means that a large amount of NPLs could increase even further. This will affect bank profits and hit revenue collection. So, we need to facilitate this through monetary policy and other government mechanisms, either by paying for their work or by allowing them to transfer their projects.”
Furthermore, CEO Gyawali also spoke about how borrowers should be treated differently. He suggested that people who intentionally do not pay back their loans should not be grouped with those who cannot pay due to genuine reasons like an economic slowdown or other difficult circumstances. Currently, if a loan goes into the ‘loss’ category within one year, procedures such as blacklisting, blocking passports, or even confiscating them can begin. He fears this system might further trouble businesses that are already in a genuine crisis. While he believes strict action is needed for those who deliberately avoid payments, he emphasized that businesses struggling due to genuine investment issues, economic recession, or other problems need more time and support.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
