BLACKLISTING Presented by: - PowerPoint Presentation

BLACKLISTING Presented by: Nisha Thapa Magar

Directives No. 12/073 Provisions Relating to Credit Information and Blacklisting (Nepal Rastra Bank)

Who are blacklisted as borrowers? There are many criterions in NRB directives under which a borrower could be blacklisted. But the major criterions are as follows: When the borrowers, who have the outstanding loans equal to or in excess of 10 lakhs and whose principle and interest are overdue by a year. -Bankruptcy or Disappearance of Borrower,   -Misuse of Credit Facilities by the Borrower,   -Inadequate or inappropriate security, -If misuse of the goods placed in collateral security is proved ;

If the licensed institution has filed a lawsuit against the borrower in a court of law.»Auction notice by the Bank or FIs for loan recovery » Borrower proven guilty by the court for forgery & criminal cases.  » Borrower fails to repay debt even after the court notice issued in favor of Bank or FI.  It is the banks and financial institutions who recommend the names of the defaulted borrowers for the blacklist .    

Other circumstances Leading to Blacklisting: (a) If involved in deceiving through use of counterfeit documents and instruments like cheque , draft, foreign currency, Credit/Debit card, bills. Similarly, convicted by a court to have committed such offence; (b) If any individual, firm, company or corporate body is proved to have been involved in offences relating to financial matters.

(c) A situation in which any individual, firm, company, an institution failed to repay the loan amount from a licensed institution without the time limit stipulated in the deed of loan and the bank and financial institution has taken action pursuant to Section 57 of the Banks and Financial Institutions Act, 2006. ( d) In the event where the licensed institution has to write off a loan; (e) If a cheque is issued in a situation where it would not be cashed or there is no sufficient balance in the account;

T he concerned licensed institution may recommend the Credit Information Bureau Ltd. to blacklist the debtors The Credit Information Bureau Ltd. shall, within five days, ascertain the name list recommended from the concerned licensed institution for blacklisting and put them in the blacklist. the name list shall be blacklisted within five days and the procedures for delisting from the blacklist shall be according to the prevailing policy and procedural provisions.

Parties to be included in Blacklist (a) The borrower individual, firm, company or corporate body utilizing the credit facility; (b) Proprietor of a proprietorship firm; (c) Partners of a partnership firm; (d) The individual, firm, company or corporate body that has provided guarantee for extension of such credit facility to any individual, firm, company or corporate body; Provided that, prior to including the guarantor in the black list, the licensed institution shall serve the guarantor a notice of 35 days for settlement of the 325 guaranteed amount. The guarantor shall be included in the black list if the transaction is not regularized within such notified period. (e) Directors of a company, corporate body; (f) Following persons of Public or Private Companies- (1) Directors, (2) Shareholders holding 15 percent or more share ownership, Provided that, this shall not prohibit the bank and financial institution to place on blacklist the shareholders of private and public companies holding less than 15 percent shares if such shareholders have financial interest in the company through any means. (3) Person, firm, company or corporate body having the right to nominate Director.

In case of death of the borrower, the licensed institution may, by assigning the liability to the individuals who receives the assets of the deceased, provide suitable time period to the individuals assuming such liability. The concerned licensed institution shall serve a notice of at least 35 days to the concerned borrower or all other related parties to the credit explaining the reason for inclusion in the blacklist, and its record shall be maintained.

Circumstances not requiring blacklisting (a) Occurrences of natural calamity like flood, landslide, earthquake and so on; (b) In respect of the borrowers who/which are provided with refinance facility prior to blacklisting on the recommendation of the Sick Industry Rehabilitation Committee, until the period allowed for utilization of such refinance facility; (c) Government of Nepal has acquired the customer's property and place of business; Provided that the grounds on which such decision is made shall be clearly stated.

Criterions for removing from the BlacklistsApart from other criterions, the major criterions for removing from blacklist are: » On the settlement of loan account» Credit facilities rescheduled or restructured under the prudential norms of Central Bank. » Liabilities of the loan accepted by other person which is acceptable to the Board of Directors of the concerned Bank and FI Removing name from blacklist for Non-willful defaulters for six months In case of more borrowers, if debt is cleared by particular borrower, his name will be delisted.

Punishment and provisions relating to Actions:Under Section 100 of Nepal Rastra Bank Act, 2002 against the concerned licensed institutions or their concerned Directors, executives, including employees,-Punishment for extension of credit facility to blacklisted parties ( fine equal amount) - Imposition of fine for not recommending for inclusion in the black list (equal amount of loan) -Cent Percent Loan Loss Provision to be made for loans provided to blacklisted individual , firm, company or corporate bodies ( fine not exceeding five hundred thousand rupees)

Thank you!!!!!