NRB Takes Action Against Three Commercial Banks for Regulatory Breaches

Nepal Rastra Bank (NRB) has taken regulatory action against three commercial banks and issued warnings over violations of banking laws and supervisory directives.

The central bank penalised NIC Asia Bank Limited, Global IME Bank Limited and Nepal Investment Mega Bank Limited for breaching provisions of the Nepal Rastra Bank Act, 2058 (2002) and the Unified Directives issued to Banks and Financial Institutions.

According to details of supervisory actions made public by NRB for the second quarter of the current fiscal year, NIC Asia Bank repeatedly violated the central bank’s directives by publishing financial statements in contravention of written instructions issued to the bank.

Under Section 100(2)(c) of the Nepal Rastra Bank Act, former NIC Asia Bank Chairperson Tulsi Ram Agrawal and former Chief Executive Officer Roshan Kumar Nyaupane were each fined Rs 200,000.

Similarly, NRB cautioned Global IME Bank after an on-site inspection found deficiencies in maintaining adequate loan loss provisions and non-compliance with provisions related to loan rescheduling and restructuring under the Unified Directives, 2081.

The inspection report also noted that the bank’s core banking system allowed the possibility of reactivating settled loans by retaining their previous value date, raising supervisory concerns.

Likewise, NRB warned Nepal Investment Mega Bank Limited after finding that the bank failed to properly secure loan-related documents and disbursed loans exceeding guaranteed amounts without obtaining customer signatures, in violation of central bank instructions.

The central bank further stated that the bank maintained an interest rate spread of more than two percentage points on similar categories of loans and disbursed new short-term loans during the final months of the quarter in breach of provisions under the Working Capital Loan Guidelines, 2079.

NRB said it had formally warned the concerned banks’ boards of directors and chief executive officers in line with supervisory provisions. -- RSS