NRB clarifies that Nepali banks are not in critical financial health

Published On: February 21, 2024 08:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 21: Amid rumors spread against the financial health of few Nepali banks, Nepal Rastra Bank (NRB) has clarified that the banks strictly adhere to adequate safety measures enforced by the central bank.

The banking sector’s regulator has expressed its concern over the rumors recently being raised against the financial health of a number of banks and financial institutions by groups and individuals with vested interest including the controversial figure Durga Prasai.

Of late, many debtors of banks who are denying settling their financial liabilities have been found spreading the rumors against a number of banks. They have been misleading the people asking them to withdraw their deposits stating that the banks will soon face a financial crisis. This is expected to pose a serious threat to the country’s financial sector.

Issuing a press statement, the NRB said that the banks and financial institutions are under the direct supervision and minute surveillance framework of the central bank. A number of legal frameworks have been implemented for the strengthening and transparency of the BFIs, while they themselves have been practicing international banking principles and good practices under the guidelines of the NRB.

“The status of capital adequacy, credit-deposit ratio and liquidity position of the BFIs are within the framework of the NRB’s guidelines,” states the press release issued by the NRB. 

“The NRB time and again has been enforcing reform measures through issuing necessary directives in case any problems are seen in BFIs related indicators.”     

The NRB has asserted that the overall banking sector is capable enough to safeguard the interest of the depositors. Stating that the banks are entities of the sensitive area, the central bank has urged the stakeholders including investors, depositors and customers, among others, to carry out financial transactions without having any doubts.  

Former NRB Governor Dipendra Bahadur Chhetri criticized the government authorities for failing to take actions against those who are spreading baseless rumors. “Although banks are themselves responsible to some extent for cropping the present situations, the one spreading rumors should face legal action,” he said.  

According to the sector’s analysts, Nepali banks are relatively safe as most of their lendings are based on fixed property as collateral. “Many banks at present are reeling under threat of soaring non-performing loans. However, they are in a position to return their depositors’ money,” said Bhuvan Kumar Dahal, former chief executive officer of Sanima Bank.   


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