NRB Under Pressure to Meet IMF Deadline as Loan Portfolio Review Nears Completion

Nepal Rastra Bank (NRB) is under mounting pressure to meet the December end deadline set by the International Monetary Fund (IMF) to submit the loan portfolio review of the country’s 10 largest commercial banks.

Although the central bank says the review is in the final stage, the delay in finalizing the contract with Bangladesh-based Howladar Younus & Company means the international consulting firm will be submitting the report only in late January.

NRB spokesperson Guru Paudel said Howladar Younus & Company has completed on-site inspections and data collection, with assessment work currently underway.

NRB signed an agreement with Howladar Younus & Company on August 28, 2025, to conduct the loan portfolio review of 10 commercial banks. Under the contract, the consultant is required to complete the assignment within five months and submit the final report by January 26, 2026.

“The consultant has already carried out field visits and collected the required data and information,” Paudel said. “As the core work has been completed, we are optimistic that the report will be prepared within the contractual agreement.”

However, the central bank has committed to submitting the loan portfolio review report to the IMF by the end of December 2025. Although NRB approved the consultant’s proposal in July, a delay of about a month in finalising the contract raised concerns that the IMF-agreed timeline could be affected. To address this, NRB has been pressing the consultant to submit a preliminary report by December, based on which the central bank will provide feedback before the final report is prepared.

The review evaluates banks across multiple indicators, including credit policies and procedures, loan classification, collateral valuation, provisioning practices and compliance with regulatory requirements. The consultant is conducting a detailed examination of loan portfolio, core banking systems, the status of project financing and loan repayment performance.

Paudel said the exercise itself is not new for the central bank, noting that similar assessments are conducted regularly. “This is a routine supervisory exercise that NRB has been carrying out, but this time it is being done by a third party and an international consultant,” he said. “So it does not necessarily mean the results will be drastically different.”

NRB selected banks with relatively higher loan exposure for the review based on their balance sheets as of mid-April 2025. The banks under review are Global IME Bank, Nabil Bank, Nepal Investment Mega Bank, Rastriya Banijya Bank, Kumari Bank, Laxmi Sunrise Bank, Prabhu Bank, Himalayan Bank, NMB Bank and NIC Asia Bank.

According to NRB, the review will cover about 63 percent of total lending by commercial banks. The IMF had made the loan portfolio review of the 10 largest commercial banks a key condition for providing Nepal support under the Extended Credit Facility. Accordingly, NRB selected an international consulting firm through a competitive bidding process and entrusted it with the review.

The IMF has repeatedly expressed concerns that Nepali banks may have adopted lenient loan classification practices, maintained inadequate provisioning, engaged in loan evergreening and operated with weak credit risk management systems.