The Parliamentary Public Account Committee (PAC) has directed all banks to formulate a plan of action within three weeks for recovering bad loans, which have crossed Rs 35 billion.

After holding discussion with the Governor of Nepal Rastra Bank, Bijaya Nath Bhattarai, Finance Secretary, Vidhyadhar Mallik, outgoing Auditor General, Gehendra Nath Adhikari, and representatives of the Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB) on the hurdles in recovering all non-performing loans, the parliamentary PAC gave such direction.

After giving directives to the banks, chairman of PAC Chitra Bahadur KC informed, “Such a plan of action will comprise, among other things, strategies to be adopted by banks and the value of collateral.”

Representatives of the banks told MPs that the court’s “stay orders” were the major problem the banks were facing in their bid to recover bad loans.

“Stay orders are blocking the recovery of Rs 4.45 billion in principal and interests,” said a bank official. He added that 50 percent of total bad loans, which are owed by top 20 bank defaulters, are difficult to recover. Rest of the bad loans can be recovered.

He said that freezing of passports of top bank defaulters would help recover bad loans.

“RBB’s current bad loan is Rs 12 billion. We have recovered Rs 570 million in the last four months and our target is to recover Rs 2.6 billion within a year,” said an officer from the RBB.

The MPs asked the bank representatives if they have taken any action against those officers who had taken wrong decisions while issuing loans in the past.

Representatives of NBL and RBB told lawmakers that they had taken action against officials involved in taking wrong decisions while issuing loans.