Debt recovery hindered by inadequate collateral

THE Debt Recovery Tribunal (DRT) has said that inadequate collateral and missing assets of the guarantor has made it more difficult to recover defaulted loans. According to the DRT, more than half of the cases of loan defaults it is looking into fall into this category. “Inadequate collateral and missing assets of the loan guarantor are aspects beyond our control,” said DRT Chairman Gokul Prasad Burlakoti at the stakeholders’ meeting here on Saturday. “This has made it difficult to implement the ruling that defaulted loans be recovered from such assets.” Since the establishment of the DRT a decade ago, 2,700 cases have been registered with it, and it has given its verdict on 2,599 cases. The amount to be recovered as per the DRT’s verdict stands at Rs 42.14 billion, but only Rs 16.73 billion has been recovered so far. The DRT maintains an office in Kathmandu only. Burlakoti stressed that banks and financial institutions would have to carry out valuation of the collateral properly to ensure recovery of loans. He said that private sector banks and financial institutions have also been increasingly coming to the DRT with default cases in recent days. “In the past, only governmentowned banks would come to us,” he added. The DRT was formed to recover bad loans particularly of government-owned banks as such loans had created a crisis among them a decade ago. The government had to conduct a financial sector reform programme to rescue them by taking loans from the World Bank. President of the Purbanchal Chamber of Commerce and Industry Kishor Pradhan said that the reasons why entrepreneurs have failed to repay loans should also be considered if they should default. He added that it would be better for banks and financial institutions to resort to blacklisting defaulters only after analyzing the reasons. Judges of the Appellate Court and district courts, lawyers, entrepreneurs and bankers attended the stakeholders meeting.