CIT refutes for giving loans to NAC for aircraft purchase

KATHMANDU, August 13: The City Investment Trust has decided not to hand out additional loans to the Nepal Airlines Corporation for the purchase of new aircraft citing the NAC’s bad record over repayment of principal and interest of Rs 12 billion loan for the purchase of a 'wide body' ship.
This statement of the fund came at a time when the corporation is preparing to buy more ships. Raman Nepal, executive director of the CIT, said that the amount increased to Rs 16 billion after the corporation did not pay the regular installments. He shared that the corporation had paid only Rs 250 million rupees as a 'token' in mid-June.
"Since the installments are not regular now, we are urging the Nepal Airlines Corporation, the Ministry of Culture, Tourism and Civil Aviation, and the Ministry of Finance to pay the loan," he said. "No matter what the pressure, we cannot give loans to the corporation which is known for its defaults on loans."
The Corporation has not paid the regular loan principal and interest to the CIT. According to the trust, the loan amount reached 16 billion rupees last June after the corporation did not pay regularly.
One of the corporation's two widebody ships was purchased with the trust's loan investment. At that time, the fund had given a loan of Rs 12 billion to the corporation. Due to non-payment of installments on time, even the interest has been capitalized in capital and has reached Rs 16 billion.
“The loan amount was not collected in the way it should have been. Since the government has a guarantee, we believe the government will pay the amount in case the NAC cannot," he said.
A corporation is a defaulter as long as a single rupee remains to be paid. In the current situation, the corporation has said that it will buy new aircraft from its sources, which is questionable," he said.
The corporation has also not paid the loan of Rs 27 billion to the Employees' Provident Fund. The corporation took a loan of Rs 24 billion from the Provident Fund, which increased due to interest capitalization.