KATHMANDU, Oct 20: The Nepal Rastra Bank (NRB) has taken action against six banks. During the first quarter of the current fiscal year 2023/24, the Bank Supervision Department of NRB imposed cash fines and issued warnings to six commercial banks that violated regulatory provisions.
Laxmi Sunrise Bank has been fined Rs 7 million by the NRB for non-compliance with money laundering prevention laws and directives. Similarly, Himalayan Bank was fined Rs 10.68 million for violating the credit-deposit ratio (CD ratio) regulations, as the CD ratio exceeded 90 percent in Baisakh (mid-April to mid-May) in FY 2022/23.
NMB Bank was cautioned by NRB for providing subsidized loans intended for agriculture and livestock purposes for other uses rather than for commercial purposes. The NRB has instructed the bank to return the interest subsidy amount to Nepal Rastra Bank.
Lending slows as banks focus on recovery of loans at fiscal yea...
NIC Asia Bank has received a warning from NRB for failing to return excess interest taken from customers to their respective accounts, which is contrary to the Unified Directive issued by the central bank. The bank also violated interest rate instructions for the fiscal years 2021/22 and 2022/23.
These banks provided inaccurate reporting by assigning lower risk weights to loans compared to the Capital Adequacy Framework 2015. Additionally, NIC Asia Bank was found to be in violation of the Unified Directive, resulting in a warning to the Chief Executive Officer of the bank.
Nabil Bank, in violation of the Unified Directive No 15/078, clause 3(8), increased interest rates, which led to a breach of the Nepal Rastra Bank Act, Section 100 subsection 2(a). Furthermore, the bank imposed an extra 1.5 percent penal interest on loans maintained within its core banking system, contrary to regular interest rates and penal provisions.
Nabil Bank was also cautioned by the NRB for failing to calculate risk-weighted assets as per the Capital Adequacy Framework 2015. Additionally, the bank's Chief Executive Officer was cautioned for charging service fees on a quarterly basis to customers taking loans, which were lower than the published interest rates for institutional deposits.
Citizens Bank was found to violate Unified Directive No 15/2079 issued by Nepal Rastra Bank. The bank's classification of loans did not adhere to directive number 2. The bank also failed to calculate the risk-weighted assets as per the Capital Adequacy Framework 2015 and repeatedly increased premium rates contrary to instructions. As a result, the Chief Executive Officer of the bank received a warning in accordance with sub-section 2(a) of Nepal Rastra Bank Act, Section 100.
