“We have already written to Credit Information Bureau to blacklist the promoters of Momento and Universal a few days ago. We expect to hear from it soon,” said Janardan Acharya, chief executive of RBB, one of the two public sector banks badly bitten by defaulters.[break]
According to RBB records, Momento Apparels has well over one billion rupees in outstanding principle and interest to repay to the bank. Likewise, Universal has outstanding principle and interest worth some Rs 800 million.
Momento once used to be the largest exporter of readymade garments to the US. But despite winning the prestigious largest exporter of the year awards, the company persistently ignored payment of bank loans.
In 2007, it had signed a memorandum with the bank, agreeing to pay at least Rs 3 million every month to settle its dues. But it never complied with it.
“On repeated pursuance, it paid some Rs 51 million over the span of three years. However, the amount stands nowhere compared to its debt and it continues to disregard the agreed payment terms and schedule,” Acharya informed Republica.
Universal Leather, the other defaulter, is the Biratnagar-based manufacturer of shoes and other leather products.
“If these companies continued to turn deaf ears, their promoters will face passport seizure,” Acharya added.
Even though the RBB management has managed to recover default loans, drastically bringing down its non-performing loans from Rs 17 billion, it still has well over Rs 3 billion to recover from the defaulters.
To correct the situation, the bank is yet again preparing to launch action against defaulters, particularly those who owe more than Rs 10 million. The number of such defaulters stands at over 100.
“We are blacklisting them soon and initiating yet another drive for recovery,” said Acharya.
RBB is one of the two banks which went sick due to political intervention and heavy loans defaults. It has been subjected to reforms and restructuring under Financial Sector Reform Program since 2002 and consumed some Rs 4 billion worth of loans and grant assistance from the World Bank.
However, despite staff cut, downsizing of its branches and increased profitability, it still suffers negative net worth of Rs 9.5 billion. And the government, which holds cent percent stake, has yet to unveil its plan on the future share structure and recapitalization of the bank.
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