“Since COVID-19 and resultant lockdown has affected many sectors adversely, banking sector cannot remain unaffected” : Bhuvan Dahal

Kathmandu. Reports have been showing that the banking sector was able to sustain itself, rather in a comfortable way during the first wave of the pandemic that hit Nepal. The main question remained whether in case of another wave will the banking sector still stay unhinged?

In an interaction with Lokpath.com, Mr. Bhuvan Dahal, the president of Nepal Bankers Association and CEO of Sanima Bank, shared his view on this matter. He stated, “Banking sector and other sectors of economy are inextricably interlinked. Since COVID-19 and resultant lockdown has affected many sectors adversely, banking sector cannot remain unaffected. Banks have lost millions of revenues. Moreover, it is now sitting with Non Performing Loans (NPLs) exposing banks to losses.”

Sanima Bank has earned a profit of Rs 1.70 billion in the last fiscal year. Out of which, Rs. 1.11 billion can be distributed to the shareholders so the bank can pay a 12.61 percent dividend from last year’s profit this year. Sanima Bank also dropped from twelfth to the thirteenth position, in terms of distributable profit. Dahal added, “Although NPL has increased and profit has sharply dropped, banking sector is still hale and hearty. In case of commercial banks, loan volume is around 2,900 billion and capital fund is around Rs.600 billion, a healthy volume to absorb possible losses. Capital adequacy ratio of banks ranges from 12% to 20% against requirement of 8.5%.”

When asked about what can be done to mitigate some risks Dahal said, “If the government strengthens the health infrastructure and encourages opening major cities/areas with large share of economic activities, the negative impact can be minimized.”  Further adding to his statement Dahal said, “If the mentioned suggestions are implemented, banks will suffer some losses but won’t face the survival challenges even if the second wave occurs.”

Dahal ended his statement on a positive note saying, “We will work closely with NRB to face the challenges posed by the pandemic.”

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