Existing blacklist remains unaffected by new monetary policy directives

Kathmandu, September 21 — Although the provisions of the monetary policy have extended the time for repaying loan principal and interest, over five hundred construction businesses remain blacklisted. With unclear information regarding businesses already on the blacklist, those that were blacklisted prior to this new arrangement still remain on the list.

The Nepal Rastra Bank, in its monetary policy announced in the second week of Shrawan, extended the deadline for construction businesses to settle outstanding amounts with banks until the end of Mangsir. A week later, the bank issued a directive to implement this. The directive states that "for construction businesses facing difficulties, the principal and interest payments due by the end of Asar 2081 must be extended to the end of Mangsir 2081."

With this directive, banks and financial institutions have halted recommendations for blacklisting. However, those already on the blacklist have not been released. Bijay Kunwar, spokesperson for the Credit Information Bureau, stated that while recommendations for new blacklists have ceased, existing blacklisted businesses have not been freed. The center indicated that it will only add or remove names from the blacklist based on recommendations from banks and financial institutions, and no such recommendations for removal have been received.

"We will add or remove names from the blacklist based on recommendations from banks and financial institutions. Since the monetary policy, no recommendations have come in to blacklist anyone, nor has there been any recommendation to remove anyone all at once."

Over 500 businesses affected

The number of businesses that have not benefited from these provisions despite the monetary policy stands at over five hundred, according to the Federation of Contractors' Association of Nepal (FCAN). General Secretary Roshan Dahal stated that while he does not have exact figures, there are still more than five hundred businesses facing problems related to the blacklist. He mentioned that the bank accounts of these businesses are still frozen. Some accounts even have funds, but they cannot settle transactions.

Specifically, businesses that have been unable to repay loans due to the government not making payments and issues with bounced checks are still on the blacklist. Even when these businesses receive payments later, they have been unable to access those funds due to being blacklisted, complicating transaction settlements, Dahal explained.

"Even after completing work on time, the construction businesses that did not receive payments from the government ended up on the bank's blacklist, resulting in their accounts being frozen. Although the government has sent money now, while it has been deposited in their accounts, they cannot withdraw it due to being blacklisted," Dahal said. "I cannot access my own funds to settle transactions or clear bounced checks or repay bank loans." This situation has dampened the enthusiasm of construction businesses that had hoped for relief from the monetary policy.

What does the NRB say? 
While the Nepal Rastra Bank has mentioned extending the deadline for repaying loans due by the end of Asar, it did not specify whether this provision would apply to loans taken previously. Furthermore, the circular issued later did not address this topic either. However, the central bank clarified that this does not include those who have already been included on the blacklist up to the time of the circular.

Ramu Paudel, spokesperson for the central bank, stated that until the date the circular was issued, the treatment of those on the blacklist should be similar to general provisions. He clarified that the policy introduced by the central bank is not for those who have been on the blacklist for years but rather for those who, due to situational constraints, are unable to repay their loans immediately.

Construction businesses received 1.5 billion in payments over two months

In the first two months of the current fiscal year, the government is estimated to have made payments amounting to nearly 15 billion rupees to construction businesses, according to FCAN. The Federation had previously announced in a press conference at the end of Asar that about 60 billion rupees in payments were pending, which has now been estimated to be around 45 billion.

Dahal noted that the government has begun making payments for amounts that were created as liabilities for completed work last year in four installments, and so far, only the first installment has been received. This means that construction businesses may have to wait a year to receive payments from the previous year.

Data from the Financial Comptroller General Office also shows that during these two months, capital expenditures have matched that amount, with 14 billion 894 million 400 thousand rupees spent according to the office's budgetary report. Since new contracts have not been awarded in a timely manner, it can be assumed that the current payments largely comprise outstanding amounts from the previous year.