Banks' Exposure On Heavy Equipments Rs 20 Billion

     Investment of banks and finance companies on heavy equipment used for construction works has reached Rs 20 billion.

According to Tara Bahadur Kunwar, President of Heavy Equipments Entrepreneurs Association, around 8,000 such equipments are imported annually and among them, 5,000 are financed by banks.

Since one such equipment costs between Rs 15 million to 150 million, it is impossible to import it without bank finance, say entrepreneurs. Rajan Shrestha at Continental Trading Enterprises, the authorised distributor of Komtasu, said the banks provide 70 to 80 per cent loan to purchase such heavy equipments.

Suman Joshi, Chief Executive Officer (CEO) of Laxmi Bank confirmed that the banks finance up to 70 per cent of the equipment price under hire-purchase loan or under term loan to construction companies. Calculated on that basis, the amount of bank finance on such machines totals to Rs 20 billion. 

    Kunwar said that the growth of construction sector, low customs duties and easy financing service has increased the trend to buy heavy equipments and run a business of providing such machines on hire.