After months of delay, Nepal Rastra Bank (NRB) has selected Bangladeshi consultancy firm Howladar Yunus & Co. to carry out a loan portfolio review of the country’s 10 largest commercial banks. The central bank on Wednesday issued a letter of intent to award the contract to the firm. According to NRB, Howladar Yunus was chosen based on its high scores in both technical and financial evaluations.
NRB has accepted the firm’s proposal worth Rs 43.88 million (excluding VAT). “If no complaints are received within a week, we will proceed with the contract agreement and begin the next steps,” said NRB spokesperson Kiran Pandit.
Read: IMF Urges Nepal to Expedite Loan Portfolio Review of 10 Major Banks
The International Monetary Fund (IMF) had made the loan portfolio review a prerequisite for Nepal to access the Extended Credit Facility (ECF). In response, NRB initiated the process of selecting an international consulting firm to conduct the assessment. A recent IMF report on Nepal expressed concern about rising risks in the financial sector and emphasized the urgency of reviewing the quality of bank loans. The report noted that banks in Nepal had been lenient in loan classification, kept provisioning low, and lacked strong risk management systems.
Howladar Yunus was selected through a second round of bidding after the initial process was cancelled. In the second round, several international and domestic firms submitted proposals. These included a team led by Nepal-based Subedi & Associates in partnership with India’s Mehra Goel & Co and JKSS & Associates; BK Agrawal & Co of Nepal, supported by India’s SR Batliboi & Associates; Deloitte Partners of Sri Lanka; and two Indian firms, KPMG Assurance and Consulting Services and MSKA & Associates.
Read: NRB Reopens Bidding for Loan Portfolio Review of Top 10 Banks
In the first round of bidding, five firms had been shortlisted, but only KPMG submitted a financial proposal. As a result, NRB annulled the process and issued a fresh call for proposals. For the second round, the minimum qualification score for consultants was lowered from 70 to 60. The evaluation criteria were weighted with 50 percent for qualifications, 40 percent for experience, and 10 percent for operational capacity.
According to the agreement with the IMF, the loan review was initially scheduled to begin by the end of April 2024 and conclude by December 2024. An action plan for reforms was expected to be implemented from February 2025. However, due to delays in the consultant selection process, NRB formally informed the IMF about its inability to begin the loan portfolio review on time. In a letter made public by the IMF, Finance Minister Bishnu Prasad Paudel and the then NRB Governor Maha Prasad Adhikari committed to completing the review by December 2025.
Read: Nepal Commits to Loan Portfolio Review of Big Banks by December 2025
