Nepal Rastra Bank Takes Action Against These Development Banks and Finance Companies
In the final quarter of the last fiscal year, Nepal Rastra Bank (NRB) took punitive actions against five development banks and three finance companies for various regulatory violations.
Narayani Development Bank continued to face Prompt Corrective Action (PCA) from the central bank. Similarly, Sindhu Development Bank has also been subjected to PCA measures.
The central bank reported that after supervisory adjustments to the financial statements submitted by Narayani Development Bank on Ashad 11, 2081, the institution’s minimum capital adequacy ratio was found to be deficient by 32.90%. The bank's capital adequacy ratio stood at only 6.71%, prompting the NRB to impose PCA. Additionally, due to irresponsible justifications by the bank’s board of directors, led by Chairman Rajendra Kumar Shrestha, for failing to own up to decisions made under management's recommendations and for not complying with repeated directives for institutional improvements, the NRB has fined Shrestha Rs. 500,000.
During the fourth quarter of the fiscal year 2080/81, the NRB took disciplinary actions against and issued warnings to the chairpersons and chief executive officers of various development banks and finance companies.
The development banks facing NRB's actions include Karnali Development Bank, Narayani Development Bank, Corporate Development Bank, Sindhu Development Bank, and Excel Development Bank. Among finance companies, Best Finance, Reliance Finance, and Progressive Finance have been penalized.
Karnali Development Bank was fined Rs. 2,546 for failing to maintain the mandatory cash reserve ratio as per regulatory requirements. The PCA imposed on Narayani Development Bank on Magh 21, 2080, was also continued.
Corporate Development Bank, Excel Development Bank, Best Finance, and Reliance Finance were penalized for delayed submission of balance sheets and profit and loss statements to the NRB and for late public disclosure of these statements. These institutions failed to complete the annual audit within six months of the fiscal year-end and delayed their annual general meetings, leading to NRB's actions.
Progressive Finance, which failed to complete external audits and hold its annual general meeting for the fiscal year 2078/79 within the specified timeframe, only completed the AGM in fiscal year 2080/81. Additionally, it has yet to submit the external audit report for fiscal year 2079/80 to the NRB for approval. Consequently, the NRB has issued a warning to the chief executive officer and the board of directors of Progressive Finance.
