31st October 2025, Kathmandu
Sanima Bank Limited’s Dhanagadhi Branch has issued a highly stringent and urgent public notice demanding that borrowers who have used vehicles as collateral for their loans immediately submit the pledged assets to the branch.
Notice for Pledged Vehicle Submission
This decisive action is a clear reflection of the bank’s commitment to disciplined loan recovery and the strict management of its secured asset portfolio, particularly those loans that have become delinquent. The notice emphasizes the critical importance of timely compliance, establishing a tight deadline of seven days, after which the bank warns it will move immediately to initiate strict legal proceedings to recover the collateral and enforce the terms of the loan agreement.
The Enforcement of Collateral: Legal and Financial Implications
In Nepal, as in global banking practices, a secured loan (like a vehicle loan) grants the lender a legal claim—or a hypothecation/mortgage—over the specific asset purchased or secured by the loan. When a borrower fails to meet the contractual obligations of repayment (i.e., defaults), the bank is legally entitled to take possession of the collateral to recover its principal and interest amounts. This action is rooted in the Bank and Financial Institution Act (BAFIA), 2073, specifically Section 57, which grants BFIs the authority for the provision and recovery of credit.
The Seven-Day Window: The short, seven-day window set by Sanima Bank is a non-negotiable deadline that signals the bank has likely already completed preliminary default notifications to the borrower. This final public notice is the penultimate step before formal legal action is launched, and is designed to prompt immediate, decisive action from the borrower.
Borrower’s Responsibility: The notice explicitly reminds borrowers of their responsibility to fulfill their obligations under the loan agreements. The bank urges borrowers to contact the Dhanagati Branch immediately to arrange the peaceful handover of the pledged vehicle. By doing so, borrowers can avoid the significant financial and legal escalation that follows non-compliance.
Legal Consequences of Non-Compliance: Failure to submit the pledged vehicle within the stipulated seven days will trigger the next phase of the recovery process. Under Nepali law, the bank will proceed with strict legal measures, which typically involve:
Auction of Collateral: The bank will initiate the process to legally seize and auction the pledged vehicle. The sale proceeds will then be used to settle the outstanding loan principal, interest, and all associated recovery costs.
Blacklisting: The borrower is almost certainly reported to the Credit Information Bureau (CIB), resulting in them being blacklisted. This severe consequence makes it virtually impossible for the borrower to obtain any new credit, loan, or financial facility from any bank or financial institution in Nepal for an extended period.
Deficiency Judgment: If the sale price of the vehicle at auction is insufficient to cover the entire outstanding debt, the bank can pursue a deficiency judgment, legally seeking to recover the remaining balance from the borrower’s other movable or immovable assets, as per the provisions of the BAFIA.
Commitment to Operational Integrity and Risk Management
This decisive public notice from Sanima Bank reflects a broader industry commitment to maintaining operational integrity and robust Non-Performing Loan (NPL) management. Banks must adhere to strict regulatory guidelines from the Nepal Rastra Bank concerning the provisioning and classification of loans.
Asset Quality and Provisioning: When loans become delinquent, banks are required to allocate a portion of their profits (provisioning) to cover the potential loss, which negatively impacts profitability. By initiating timely collateral recovery, Sanima Bank is actively working to minimize its NPL exposure and protect its asset quality, which is crucial for maintaining investor confidence and regulatory compliance.
Transparency and Prevention: The issuance of a public notice is part of the transparency mechanism designed to ensure that borrowers are fully aware of the consequences and the imminent risk of losing their asset. The clear communication is intended to prevent further complications and provide a final opportunity for the borrower to remedy the default situation, either by submitting the collateral or potentially by negotiating a formal loan restructuring plan with the branch.
Borrowers of Sanima Bank’s Dhanagati Branch who are affected by this notice are strongly advised to act promptly. Direct communication with the branch’s Legal or Loan Recovery department is the only way to avoid the cascading consequences of legal proceedings and blacklisting.
For More: Notice for Pledged Vehicle Submission