With large businesses to small businesses, as well as individuals, struggling to pay their dues and fulfill financial obligations on time due to the ongoing economic crisis, there has been a dramatic surge in the number of blacklisted individuals and firms.
The number of individuals and firms blacklisted by the Credit Information Bureau (CIB) at the request of banks and financial institutions surged by 142.38 percent in the last fiscal year 2022/23.
According to the bureau, a total of 30,109 individuals and firms were blacklisted in FY 2022/23. In the previous fiscal year 2021/22, a total of 12,422 firms and individuals were blacklisted.
The CIB blacklists the individuals and firms defaulting on loans and those failing to issue non-funded or underfunded checks at the request of the banks and financial institutions (BFIs) concerned.
Such is the surge in the blacklisting that the number of blacklisted individuals and firms in the last year has surpassed the total number of blacklisted till FY 2021/22. Till FY 2021/22, around 27,000 individuals and firms were blacklisted by the CIB. However, in the last one year (FY 2022/23), 30,109 individuals and firms were blacklisted.
Experts and bankers attribute the rise in blacklisting to the current economic crisis. There has been an interruption in the flow of money in the market due to a prolonged liquidity crunch as well as the slowdown in aggregate demand. In addition, banks and financial institutions’ higher interest rates have also hit small businesses hard.
Companies and individuals issue checks of a certain date to settle their business and personal transactions. However, due to the recent downturn in business, the ability of companies and individuals to pay their creditors has weakened. People often issue bad checks to their creditors to avoid a difficult situation.
Since last fiscal year, the CIB has also introduced a policy of blacklisting people defaulting on loan payments to microfinance institutions. Of the total blacklisted individuals and firms, 721 are customers of microfinance institutions while the remaining 29,388 have been blacklisted on the recommendation of commercial banks, development banks, and finance companies. The total number of blacklisted individuals and firms has reached 56,384 by the end of FY 2022/23.
Banks and financial institutions recommend individuals and firms that fail to repay loans for six months for blacklisting to the CIB.
The majority of blacklisting that has happened in the last fiscal year is related to check bounces. CIB Spokesperson Bijay Kunwar said that there were more cases of check bounces in the last fiscal year.
The statistics of Nepal Police also tell that cheque bounces cases are on the rise. According to the data obtained from Nepal Police, 6,483 cases of banking offenses with the amount equal to Rs 8.57bn have been registered till mid-March 2023.
The data show there have already been more banking fraud cases registered in the first eight months of FY 2022/23 than in FY 2021/22. According to Nepal Police, a total of 5,416 cases of banking fraud were registered in the last fiscal year.
The majority of banking offense cases are related to cheque bounces. In this fiscal also, 99 percent of banking offense cases are of bad cheques.
Of the total 6,483 banking fraud cases, 6,422 were related to bad checks. As per the Banking Offense and Punishment Act, 2008, the non-payment of a written cheque three times due to the account holder’s failure to maintain the amount mentioned on the check is counted as a banking offense.
Number of blacklisted individuals and firms
FY Number
2020/21 4,474
2021/22 12,422
2022/23 30,109
