Entrepreneurs, businessmen say hard to pay bank interest, loan
By Narayan Adhikari, KATHMANDU: The entrepreneurs and businessmen in Chitwan district have said the lockdown has dented their business so much that they are not in a position to pay the bank interest and the loan installments.
The government has already issued a notice for payment of interest and loan installments by the 15th of this month when the current fiscal year ends. But the business community is hard-pressed for the same. They complain that it is difficult for them to even pay the workers and employees, and the electricity and telephone bills, forget about paying the bank interest and loan installment any time soon. The booming local hotel industry has been hit the hardest by the slump in the economy triggered by the lockdown. The hotels have not come back to business.
Deepak Bhattarai, president of the Regional Hotel Association Chitwan, said it is difficult to revive the hotel industry. As he said, the hotel entrepreneurs are not in a situation to pay the bank interest and installments. They are not even in a position to pay the few employees kept for looking after the hotels and the electricity bill. There is an investment of more than 20 billion rupees in the hotel industry in Sauraha. Bhattarai said the bank loans alone account for more than eight billion. He said there is no option than to postpone the deadline for payment of interest and installment to banks and financial institutions. The same is the condition of other small hotels and restaurants in Sauraha. In the words of Dinesh Chuke, senior vice-president of Hotel Entrepreneurs Federation Nepal, the condition of 80 thousand hotels associated with the federation is also financially not sound. He said they are not able to pay the bank interest and installment as their business is completely closed during the lockdown. “The hotel entrepreneurs had invested 25 to 30 percent more in hotel business targeting the Visit Nepal Year (VNY) 2020 which was announced by the government with the aim of drawing more tourists throughout 2020. But the VNY program had to be canceled due to the fear of coronavirus. On top of this, the hotel business has come to a complete closure due to the lockdown. So, we are not in a position to pay the interest and the installments,” he explained their predicament. More, he suggested that the government should make arrangements for providing 5 percent more refinancing to hotels. The poultry business to has its share of financial woes due to COVID-19.
President of Nepal Poultry Federation, Guna Chandra Bista, said many poultry farmers have been displaced from the business. According to him, the poultry farmers are not able to pay the interest and installment not only this time but for the whole year. He suggested banks refinance the poultry business as it would take one year for the business to come back to its previous form. More than Rs 1.5 billion is invested in the poultry business in Nepal. Of this, more than 35 billion in a bank loan. Nepal Feed Industries Association central committee senior vice chair Shankar Prasad Kandel said domestic poultry business may collapse if the state lends no support to it. Farmers have suffered a huge loss during this crisis and they are even not in the position of paying interest for a loan they had taken to start the business, according to him. The transport sector has been entirely affected by COVID-19. Federation of Nepalese National Transport Entrepreneurs central vice-chair Ram Subedi said vehicles, the means of earning, are grounded in parks and entrepreneurs can not afford the installment and interest when income has stopped for months. Bodies concerned have been already apprised of the challenges they are facing .
According to him, over 900,000 vehicles are there for the means of public transportation and over Rs 150 billion has been invested in this business while 60 percent of the investment remains as the bank loan. The health sector is too not untouched by the crisis. Nepal’s private medical sector has a huge investment. Chitwan Medical College Chair and Managing Director Prof Dr. Harishchandra Neupane expressed the inability to pay bank loan installment and interest. Country’s 18 medical colleges need to pay around Rs 10 million interest and Rs 20 million instalment every month. Neupane, who is also the outgoing chair of the Association of Private Medical and Dental Colleges of Nepal, shared that such medical facilities are finding it hard to pay staff in this crisis.
These facilities managed budget through teaching colleges, but the collection of the fees has been nil as classes have been suspended with the arrival of crisis. The education sector has the same story to share with. Bhrikuti Boarding School Narayangadh’s principal Ramji Pandey shared the possibility of paying bank installment and interest seems far when they have failed to pay staff. The Nepal Rastra Bank has so far taken no-decision in regard to the matter. Prime Bank’s Bharatpur manager Padam Poudel said debtors are required to clear installment and interest by mid- July as he had no alternative except to take up the matter before the central office.