KATHMANDU, Jan 9: After the Karnali Development Bank incident, Nepal Rastra Bank (NRB) has started reviewing the liquidity of six institutions, including development banks and finance companies.
The central bank is analyzing the liquidity of Saptakoshi Development Bank, Excel Development Bank, Narayani Development Bank, and Sindhu Bikas Bank, as well as Janaki Finance and Pokhara Finance.
Revised interest rate corridor system introduced
This week, NRB sent a letter to commercial banks asking if the six institutions hold deposits with them. The move follows the NRB taking over Karnali Development Bank Limited, which had submitted fake deposit certificates to the NRB, falsely claiming funds at commercial banks. The NRB had declared the bank problematic on December 25.
An internal investigation revealed that the bank’s high-level management, including the former Executive Chairman, CEO, and Finance Department Chief, were involved in embezzling funds. Fake bank balance certificates were created to cover up the theft, which included doctored documents submitted to NRB’s monitoring team.
In response to this issue, NRB has begun closely monitoring other institutions with deteriorating financial conditions. NRB has sought information from commercial banks regarding the deposit statuses of these institutions. While no response has yet been received, the central bank is analyzing the liquidity situation of these institutions before taking further action. If the liquidity is found to be healthy, the management is expected to resolve the issues internally. Otherwise, NRB will explore measures to improve their financial health, rather than declaring them problematic as it did with Karnali Development Bank Limited.
