Rising Risk Reserves: A Deep Dive into Nepalese Banks’ Other Liabilities

At the end of Jeth 2082 (Mid-June 2025), the consolidated data on "Other Liabilities" of Nepal’s major commercial banks presents a significant picture of contingent and provisioning burdens. These liabilities, not directly tied to deposits or borrowings, consist mainly of sundry creditors, loan loss provisions, interest suspense accounts, and miscellaneous payables — all vital indicators of a bank’s operational risk exposure.

Among all institutions, NIMB tops the list with total other liabilities of Rs. 68.63 billion, driven significantly by loan loss provisions (Rs. 22.16 billion) and a high ‘others’ category (Rs. 36.61 billion). Global IME Bank follows with Rs. 58.52 billion, with the largest portion again being loan loss provision (Rs. 21 billion) and other payables (Rs. 34.82 billion). NABIL Bank ranks third, reporting Rs. 55.46 billion, with a notable Rs. 25.88 billion listed under sundry creditors, the highest in that sub-category among all banks.

Some banks like SCBNL (Rs. 8.73 billion) and Sanima Bank (Rs. 10.95 billion) report relatively low figures, suggesting a leaner structure or more conservative provisioning policies. On the other hand, banks such as Kumari Bank (Rs. 48.44 billion) and ADBL (Rs. 49.92 billion) carry heavy other liabilities — primarily contributed by loan loss reserves and other miscellaneous items.

The loan loss provision figures across the board indicate cautious stances toward credit risk. Many banks — notably Kumari (Rs. 28.35 billion) and Laxmi (Rs. 15.48 billion) — have aggressively built up reserves, possibly in response to increased non-performing assets or upcoming regulatory stress tests.

The interest suspense account, which captures interest income not realized due to delayed repayments, remains moderate in most banks. Interestingly, NIC, Global IME, and Sanima have not recorded any amount under this category, which could either indicate better loan performance or different recognition policies.

The ‘Others’ category remains the least transparent yet substantial. For example, Global IME has reported Rs. 34.82 billion, and NIMB has Rs. 36.61 billion, without further sub-classification. This demands greater disclosure from the banks and more scrutiny from regulators to understand the underlying components.

In summary, while loan loss provisioning appears robust, the rising volume in sundry creditors and miscellaneous payables in certain banks could reflect short-term liquidity obligations, operational inefficiencies, or pending payments. A more granular breakdown in upcoming financial statements would be essential for stakeholders to fully grasp the quality and risks embedded in these liabilities.