September 3: The number of people blacklisted by banks and financial institutions (BFIs) has increased during the period of coronavirus pandemic. People who have written cheques with insufficient balance in their accounts have been listed in the blacklist more than the debtors.

Data from the Credit Information Centre shows that 10,732 people have been added to the blacklist from mid-March to mid-August. There are 13,024 people in the blacklist. A total of 9,626 people were added in the month of Ashad (mid-June to mid-July) alone.

Similarly, the number of people blacklisted in the month of Baishakh (mid-April to mid-May) was 26 followed by 89 in Jestha (mid-May to mid-June), 137 in Shrawan (mid-July to mid-August) and 168 in Bhadra (August end).

Anil Adhikari, the Chief Executive Officer of Credit Information Centre, said that international organizations like the World Bank and the International Finance Corporation have also inquired about the increase in the number of blacklisted people. He said that confusions were created because the data published by the Centre contained the names of not just debtors but also the people with bounced cheques.

Nepal Rastra Bank (NRB) has made an arrangement through the integrated directive issued in Bhadra 2076 to blacklist a person, firm, company or an organization if they sign their cheque incorrectly or have insufficient balance in their account and do not make the payment within a week. Previously, only the people with repetitive bounced cheques were blacklisted. The Centre says that while the number of debtors with non-performing loans has gone down, the number of people with bounced cheques has increased in the blacklist. According to the Centre, 65% i.e. 6,500 people have been enlisted in the blacklist because of bounced cheques. The Chief Executive Officer Adhikari says that the remaining 35% are debtors being monitored because of bad debts or non-performing loans.

“All of the people listed in the blacklist have signed bounced cheques. Most of them have bounced cheques ranging from Rs 1,000 to Rs 10,000,” Adhikari told New Business Age, adding, “After many failed attempts of trying to get their money from the cheques, people submit an application to the bank, requesting to add their creditor to the blacklist. On this basis, the banks submit the names of their customers with bounced cheques and we add them to the blacklist.”

He added that we will be able to observe the rate of increment of people in the blacklist after the end of the exemptions provided by Nepal Rastra Bank. CEO Adhikari estimates that the number of people in the blacklist due to bad debts will increase after about 4 months.

Nepal Rastra Bank has arranged discounts to severely affected, medium affected and less affected businesses as they were affected by the lockdown enforced because of the coronavirus pandemic.

Chairman of the Nepal Bankers' Association Bhuwan Dahal said that many debtors have been saved from being added to the blacklist because of the extension in the loan payment period by the central bank. According to him, the reason for the lesser number of debtors in the blacklist  is also the exemption given by the central bank to the banks and finance companies to classify the loans given after the end of Poush 2076 (mid-January 2020) till the end of Ashad 2077 (mid-July 2020) as good loans.

“According to this arrangement, the debtors who had non-performing loans or bad debts before the end of Poush, 2076 have been added to the blacklist. If the economy improves after the exemption period finishes, we can expect the number of blacklisted debtors to decrease,” he said.

BFIs are not allowed to provide loans to blacklisted debtors. In case a loan is given to them, there is a policy that automatically considers this loan a bad debt. In addition, a blacklisted person may also not to be able to get various benefits provided by the state.