NRB Cracks Down on Six Financial Institutions

The Nepal Rastra Bank (NRB) has taken decisive action against six financial institutions, including three development banks and three finance companies. The regulatory measures signal a commitment to uphold transparency, adherence to regulatory guidelines, and safeguarding the interests of customers and stakeholders.

The NRB has issued stern warnings to the leadership of Muktinath Bikas Bank, highlighting concerns regarding the misappropriation of funds allocated for customer protection. Investigations revealed that funds designated for safeguarding customer interests were diverted for other purposes, prompting the central bank to intervene and alert the bank’s chairman and chief executive officer.

Similarly, Saptakoshi Development Bank faced reprimand from the NRB for governance irregularities, including the continued participation of an independent director beyond their tenure and unauthorized alterations to the bank’s base rate through the core banking system, a move deemed unacceptable by regulatory standards.

Narayani Development Bank found itself facing fines totaling Rs 12,846 for failure to maintain mandatory balance requirements as per regulatory provisions. Additionally, the bank incurred further penalties for an excessive increase in its Credit-Deposit (CD) ratio during specific months, signaling a need for stricter adherence to regulatory norms.

Progressive Finance and Goodwill Finance were both subject to NRB directives for their respective lapses in risk assessment and loan evaluation processes. Progressive Finance faced warnings for extending risky loans without adequate collateral evaluation, while Goodwill Finance was cautioned for insufficient due diligence in extending credit to a specific entity.

Furthermore, Guhyeshwari Merchant Banking and Finance drew scrutiny for exceeding prescribed limits on investment share sales during the last fiscal year, prompting regulatory intervention from the NRB to ensure compliance with established guidelines.

The actions undertaken by the NRB underscore its commitment to maintaining the integrity and reliability of Nepal’s financial institutions, promoting accountability, and safeguarding the interests of depositors and stakeholders.