KATHMANDU, Jan 22: The Nepal Rastra Bank (NRB) has issued warnings against three commercial banks that did not implement the instructions and rules issued by the NRB.
The NRB issued letters to Himalayan Bank, Prabhu Bank and NIC Asia Bank in this regard. A meeting of the Board of Directors of the NRB decided to warn the three banks for the violation of the directive of the regulatory body.
The NRB said that Roshan Kumar Neupane, chief executive officer at NIC Asia Bank, Chairman Tulsi Ram Agrawal, Director Trilok Chand Agrawal and Director Ram Chandra Sanghai have been notified in accordance with Section 100, Sub-section 2(a) of the NRB Act, 2058 BS (second amendment).
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The central bank decided to write a letter to NIC Asia Bank after it was found that the bank provided higher interest rates than the published rate to its directors, their family members, and promoter organizations. Similarly, it was also found that certain fixed deposit accounts were opened with backdated dates by the bank’s directors, their family members, and promotors.
During an on-site inspection of NIC Asia Bank by NRB, it was found that NIC Asia Bank had not complied with certain directives related to loan classification and loan loss provision, capital adequacy ratio and risk management measures, interest rates, and institutional governance. As a result, the NRB issued a written order to NIC Asia Bank in accordance with Section 100, Subsection 1(c) of the NRB Act, 2058.
The NRB has directed NIC Asia to refrain from any actions or decisions that are contrary to the Banks and Financial Institutions Act, 2073, and the integrated directives issued by the central bank to the financial institutions. Additionally, NIC Asia has been instructed to fully comply with the directives of the NRB to formulate and implement an action plan for improvement.
According to the Bank Supervision Department of NRB, the central bank has alerted the Board of Directors of Prabhu Bank Limited in accordance with clause (a) of sub-section 2 of Section 100 of the Nepal Rastra Bank Act, 2058 as Prabhu Bank has not complied with various provisions of the Bank and Financial Institutions Act, 2073.
A notice issued by the NRB in the second quarter of the current fiscal year (FY 2024/25), mentions that Prabhu Bank has not dedected any amount from the authorized capital of the bank in line with the provisions of the Capital Adequacy Framework 2015.
During an on-site inspection, there was a weakness in the compliance of the instructions issued by the NRB, and the improvements pointed out in the inspection report had not been promptly addressed by Prabhu Bank.
As per the Unified Directive 2080, Directive No 2, Clause No. 1 (B) issued by NRB, the Chief Executive Officer of Himalayan Bank has been warned in accordance with sub-section 2 (a) of section 100 of the NRB Act, 2058 for failing to comply with the classification of loan defaults on the basis of the period of default.
