Loan Recovery Follow-Up Checklist for Lenders in Nepal

Recovery begins long before a loan is late. It begins with a clear agreement, a schedule the borrower understands and a lender who notices a missed instalment on the day it is missed. This checklist is for lenders and finance staff who want a calm, consistent process. It is about good practice and records. For what you may lawfully do in recovery, take advice from a lawyer or the relevant authority.

Before the loan: make recovery easier

Most recoveries are easy or hard depending on what happened at the start. Check that:

• The borrower understands the schedule and has a printed copy.
• Contact details are current, including a second phone number and a relative.
• The security and guarantor records are complete.
• The amount fits the borrower's real income, not just the security.
• The agreement states what happens on late payment.

Before the due date: a reminder

A message two or three days before the due date reduces late payments more than any later action. Use SMS or WhatsApp with a short, polite line: borrower's name, amount, due date and how to pay. For borrowers who prefer a call, make it a call. Record that the reminder was sent.

Day one of lateness

The day after a missed instalment is the best time to speak. Call and ask, do not accuse. Many delays are simple: salary late, forgot, travelling. Note what the borrower says and any promised date. If a promise is made, record it and set a reminder to check. Software with a follow-up log keeps this in one place so that any staff member can see the history.

Days 7 to 30

If the promise is broken, escalate gently. Send a written notice with the overdue amount, penalty if any and a date to settle. Speak to the guarantor if your agreement allows it. Visit if distance and safety permit. Offer a realistic solution, such as paying the overdue part now and the rest in two weeks, when the borrower is genuinely cooperative. Write every offer and agreement down and have it signed where possible.

Beyond 30 days

At this stage, involve a senior person. Review the loan file: has the borrower's situation changed, is the security still adequate and is the guarantor reachable? Consider restructuring if the borrower is willing but unable under the old terms. Restructuring should be documented with a new schedule and approval, and should not be used to disguise a bad loan. If recovery through agreement fails, discuss formal steps with a lawyer before acting. Respect for the borrower's dignity protects your reputation and avoids legal trouble.

Follow-up ladder at a glance

When	Action	Record
3 days before	Reminder message	Date and channel
Day 1 late	Friendly call	Reason and promise date
Day 7	Written notice	Copy of notice
Day 15	Visit or guarantor contact	Visit note
Day 30	Senior review, restructure or legal advice	Decision and approver

What to record every time

1. Date and time of contact.
2. Who spoke to whom and by what channel.
3. What the borrower said, in a line.
4. Any promise with the date.
5. The next action and who owns it.

This log is your protection in a dispute and your guide when staff change.

Tone: firm, clear and respectful

Borrowers in Nepal often live in close communities, and word travels. A lender who is firm but fair keeps good borrowers returning and gets paid first when money is tight. Use the borrower's preferred language, speak privately and avoid discussing the debt in front of others. Offer a clear next step with a date. People pay those they respect and those who respect them, and a record of polite follow-up also shows well if the matter ever reaches a formal process.

Common mistakes

Waiting for "a better time" to call, which never arrives. Threatening language that damages goodwill and may cause legal trouble. Accepting partial payments without recording how they were applied. Ignoring the guarantor until the loan is very late. Letting one person handle all difficult cases with no oversight. And failing to update the status when the borrower finally pays, so that the overdue list fills with old items and the real problems are buried.

Learning from the pattern

Review overdue loans each quarter. Which product, area, officer or type of security produces the most arrears? Which borrowers always pay a few days late but always pay? Use the pattern to refine your lending, not just your collection. Sometimes the best recovery action is to lend a smaller amount next time.

Your next step

This week, pull a list of every loan with a missed instalment and check whether there is a recorded contact for each. If not, start the log today. Our loan management software produces the overdue list and keeps the follow-up log with each loan. Message WebsNP on WhatsApp at +977 9846280400 to see it. If you lend through groups, our microfinance software adds centre-level tracking.

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