5 Banks Fail to Meet Targeted Loan Allocation in the Energy Sector

Banking Khabar/ Five commercial banks have been found to fall short in allocating the required proportion of loans to the energy sector. These banks include Global IME Bank, Himalayan Bank, Agricultural Development Bank, Standard Chartered Bank, and NIC Asia Bank.

The central bank had earlier directed banks to prioritise the energy sector by maintaining a minimum loan allocation of 10%. The deadline for meeting this target is the end of Ashad 2084 BS. According to the central bank’s directive, banks were required to allocate 6.5% of their loans to the energy sector by the end of Ashad 2081 BS, 7% by Ashad 2082 BS, 8% by Ashad 2083 BS, and 10% by Ashad 2084 BS. By the end of Ashad 2081 BS, the average loan allocation by commercial banks to the energy sector was 8.08%. However, data from the central bank confirms that five banks have failed to meet this required proportion.

Among them, NIC Asia Bank has the lowest proportion of loan allocation to the energy sector, with only 1.42% as of Ashad 2081 BS. Similarly, Standard Chartered Bank allocated just 3.61%. Even the state-owned Agricultural Development Bank has not met the target, with only 5.28% of its loans directed towards the energy sector.

Himalayan Bank and Global IME Bank have come close to the required threshold, with loan allocations of 6.33% and 6.35%, respectively. The other 15 banks have met or exceeded the mandated proportion of loan allocation to the energy sector. Sanima Bank leads with a loan allocation of 12.48% to the energy sector, followed by NMB Bank at 12.23%, and Kumari Bank at 11.94%.

Prime Commercial Bank allocated 11.85%, Citizens Bank 10.45%, Machhapuchchhre Bank 9.29%, Laxmi Sunrise Bank 8.90%, Nepal Investment Mega Bank 8.83%, Siddhartha Bank 8.64%, and Nabil Bank 8.27%.

According to the data, Everest Bank allocated 8.24%, Nepal SBI Bank 8.07%, Rastriya Banijya Bank 7.93%, Prabhu Bank 7.31%, and Nepal Bank 6.64% of their loans to the energy sector. However, rankings vary when considering the actual loan amounts disbursed by these banks. By the end of Ashad, commercial banks had invested NPR 365.24 billion in the energy sector. Kumari Bank leads with an investment of NPR 35.75 billion, followed by Nabil Bank with NPR 31.01 billion, and Nepal Investment Mega Bank with NPR 30.57 billion.

Other notable investments in the energy sector include NPR 25.56 billion by Global IME Bank, NPR 25.25 billion by NMB Bank, NPR 23.26 billion by Laxmi Sunrise Bank, NPR 21.72 billion by Prime Commercial Bank, NPR 20.56 billion by Rastriya Banijya Bank, NPR 19.66 billion by Prabhu Bank, NPR 19.62 billion by Sanima Bank, and NPR 16.29 billion by Citizens Bank.

Additionally, Siddhartha Bank invested NPR 16.17 billion, Himalayan Bank NPR 15.69 billion, Everest Bank NPR 14.64 billion, Nepal Bank NPR 12.84 billion, Machhapuchchhre Bank NPR 12.03 billion, Nepal SBI Bank NPR 10.36 billion, Agricultural Development Bank NPR 7.01 billion, NIC Asia Bank NPR 3.82 billion, and Standard Chartered Bank NPR 3.33 billion in the energy sector.