Financial fraud cases go up in Debt Recovery Tribunal
KATHMANDU, April 19: The number of fraud cases filed at the Debt Recovery Tribunal (DRT) went up by 165 percent in the first nine months of the current fiscal year as state body established to recover bad loans started winning trust of more banks and financial institutions.
In the nine months to mid-April, a total of 53 cases related to credit defaults were filed at the DRT compared with 20 in the same period last fiscal year, the latest statistics say. The tribunal however, did not have a breakdown on types of credit that went sour.
“The number of cases (at the tribunal) has gone up as banks and financial institutions have gained more confidence in our ability to retrieve default loans,” Gokul Prasad Burlakoti, chairman of the DRT, told Republica.
To demonstrate he was not blowing his own trumpet, Burlakoti pointed to the case of Standard Chartered Bank Nepal, which he said had “recently approached the tribunal to settle one of its cases”.
Even the case of Nepal SBI Bank, which had knocked on the doors of the tribunal to recover a relatively small loan amount of Rs 555,000, showed the level of trust on the state-owned body had gone up.
“If we weren´t that effective why would they come to us,” Burlakoti questioned.
His views were shared by Govinda Babu Tiwari, former CEO of privately-owned Nepal Bangladesh Bank, which has sought help of the tribunal to recover bad loans several times.
“Their attitude has changed a lot in recent years and are now more cooperative,” said Tiwari, who left the bank around four months ago. “They even support us (banks) and remind us from time to time about the documents that we need to present to expedite the case.”
The tribunal had gained a bad reputation a few after its establishment in July 2003. During that time, it was known as a notorious agency which used to take bribes to keep cases pending for months.
“All that has changed now,” Burlakoti said. “We have now adopted an internal policy of conducting first hearing within 15 days to a month of filing the case and verdicts are issued seven days after that.”
No wonder the number of pending cases at the tribunal currently hovers at 300 from 591 in the beginning of last fiscal year. It has also recovered around Rs 13 billion since its establishment from a total claim amount of Rs 37 billion, of which Rs 886 million was recovered in the first nine months of the current fiscal year.
This is one of the reasons why most of the cases filed in the current year belonged to private commercial banks and financial institutions. This is in stark contrast to the situation of around half a decade ago when only state-owned banks - namely Rastriya Banijya Bank, Nepal Bank Limited and Agriculture Development Bank Limited - used to throng the tribunal.