“Commercial banks now have a strong capital base and they can easily absorb small shocks,” Rajan Singh Bhandari, who was recently elected as the president of the umbrella organization of banks, told media persons at an event hosted by the Society of Economic Journalists Nepal on Thursday.[break]
His statement comes at a time when several cooperatives, who had collectively amassed deposits from the public running into billions of rupees, have not been able to return the depositors´ money after borrowers failed to meet their financial obligations.
Since many of these defaulters are said to have borrowed heavily from banks, it is feared the problem seen in savings and credit cooperatives may spill over to affect commercial banks.
“These problems may affect few banks, although chances are very rare. But even if they do, it will be manageable and for a short period of time as each of the banks has capital base of around Rs 2 billion,” Bhandari said, while ruling out the possibility of commercial banks facing long term problems just because few cooperatives failed to adopt prudent lending practices.
He also said that banks were professional institutions run by professional people, and if one or two of them were engaged in unethical practices, they should solely be held accountable for their deeds. “NBA won´t tolerate such acts and offer refuge to such institutions,” Bhandari informed.
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