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Tourism sector lending declines by 57pc

Sunday - 04th October 2009

Bank lendings to tourism sector declined by 57.1 percent during the fiscal year 2008/09 compared to the previous year. According to Nepal Rastra Bank (NRB) annual report on country's micro-economic situation, credit flow to tourism service -- trekking, mountaineering, resorts, rafting and camping -- decreased to Rs. 14.73b from Rs. 34.34b.
Jyoti Adhikari, former president of Trekking Agencies' Association of Nepal (TAAN), said the previous government's policy related to Voluntary Disclosure of Income Source and the need for disclosure of income forced tourism entrepreneurs to rethink about further investment. "That's why, entrepreneurs didn't make further investment," he added.
He said the investors became reluctant to open expensive and luxurious tourism infrastructures reducing demands for loans from the commercial banks. "Small investors put money by themselves instead of borrowing from banks," he said.
However, Sashin Joshi, president of Nepal Bankers' Association said that the reason behind the decline in loan borrowing was lack of new investors in the tourism sector.
"The situation was not comparatively good for new investment," he said. "Many existing infrastructures in the tourism sector are not being exploited well even now."
Entrepreneurs also said that the political instability, strikes, protests and frequent blockade of the major highways had also dissuaded entrepreneurs from investing in the tourism sector.
Adhikari said that even if the borrowing from the commercial banks decreased last fiscal year, the business was satisfactory.
However, given the backdrop of the country celebrating Nepal Tourism Year 2011, commercial banks' lending to hotels has gone up by 12 percent to Rs. 48.58 b during the last fiscal year. The lending had witnessed the decline of 6.2 percent in FY 2007/08.
According to the NRB report, lending in other service sectors such as advertisement agency, automotive, health, hospital, education and entertainment have also increased during the last fiscal year.
Issuance of the loan by the health sector grew by 67.3 percent to Rs. 422.9 million. The sector had borrowed Rs. 252.8 million during the fiscal year 2007/08. The commercial banks loan for the investment in hospital and clinic increased by 22.4 percent.
Likewise, the loan borrowing to invest in education, advertisement, automotive and entertainment sectors posted a growth by 21 percent, 4.1 percent, 9.1 percent and 0.7 percent, respectively.


Source kathmandu post