IMF-Mandated Audit to Review Over 60% of Nepali Commercial Banks’ Loan Portfolios

Nepal Rastra Bank (NRB) has signed an agreement with Bangladeshi consulting firm Howladar Yunus & Co. Chartered Accountants to assess the quality of loans and investments of the country’s 10 largest commercial banks.

Roshan Kumar Shigdel, Executive Director of NRB’s Assets and Services Management Department, said the review is targeted for completion by December 2025. “An agreement has been reached to complete the review by December,” he noted. “However, due to festivals such as Dashain and Tihar, there may be some delays, requiring additional time.”

As of mid-July 2025, commercial banks had disbursed loans and investments worth Rs 4,960 billion, NRB data shows. The assessment will cover Rs 3,094 billion, or 62.38% of the total, focusing on banks with the largest lending and investment portfolios.

The banks under review are Global IME, Nabil, Nepal Investment Mega, Rastriya Banijya, Kumari, Laxmi Sunrise, Himalayan, NMB, Prabhu, and NIC Asia.

NRB awarded Howladar Yunus the assessment contract, valued at Rs 6,254,912 and $271,670 (excluding VAT), after the firm scored highest in both technical and financial evaluations.

The International Monetary Fund (IMF) required the audit as part of its Extended Credit Facility (ECF), citing risks of loan evergreening in Nepal’s financial sector. The IMF has flagged weak loan classification, inadequate provisioning, and poor risk management as systemic concerns.

The review will examine banks’ credit policies, loan classification, collateral valuation, provisioning practices, and compliance with regulatory standards.

Former banker Parshuram Kunwar Chhetri said Nepali banks should not fear an external review. “Nepali banks have been making provisions in accordance with IMF standards,” he said. “I do not believe this review will significantly change the situation of Nepali banks.”

Tender process

This agreement follows the second round of tendering after the first attempt was cancelled when all shortlisted firms exceeded the budget. In the latest round, several Nepali and international firms submitted proposals, but Howladar Yunus was the only one selected after technical evaluation.

Initially, the IMF-required review was scheduled to begin in April 2024 and conclude by December that year, with a reform action plan due by February 2025. Delays in consultant selection pushed the timeline, leading Deputy Prime Minister and Finance Minister Bishnu Poudel and then-Governor Maha Prasad Adhikari to assure the IMF that the review would be completed by December 2025.