Nepal Rastra Bank Takes Action Against Three Development Banks and Two Finance Companies

Nepal Rastra Bank (NRB) has taken regulatory action against three development banks and two finance companies for non-compliance with its directives. Among them, Pokhara Finance and Janaki Finance have been subjected to prompt corrective action, while Muktinath Bikas Bank, Narayani Development Bank, and Salapa Bikas Bank have received warnings.

According to the NRB, the actions were taken following inspections carried out by its Financial Institutions Supervision Department during the third quarter of the fiscal year 2081/82. The inspections revealed several violations of NRB’s integrated directives and regulatory frameworks.

Muktinath Bikas Bank

NRB issued a warning to Bharat Raj Dhakal, Chairman of the Board of Muktinath Bikas Bank, for participating as the coordinator of the bank’s building construction committee. The central bank’s directives prohibit board chairpersons from being involved in any internal or sub-committees other than the board itself, a rule which Dhakal violated.

Narayani Development Bank

The Board of Directors of Narayani Development Bank has been found repeatedly breaching NRB’s directives. NRB has issued a written order directing the bank to immediately halt such violations. After being removed from the list of troubled institutions on Shrawan 21, 2077, the bank was instructed to raise its paid-up capital within two years, limit public deposits within 100% of paid-up capital, and cap single client loans at 10% of primary capital. However, the bank failed to meet these requirements and continued to collect deposits and disburse loans beyond the prescribed limits. It also failed to maintain the required capital adequacy ratio over an extended period. Consequently, NRB has instructed the bank to comply with the required minimum capital and capital adequacy ratio by the end of Asar 2082.

Salapa Bikas Bank

Salapa Bikas Bank was warned for failing to meet the minimum paid-up capital requirement and for ignoring multiple directives issued by the central bank. The NRB noted that the institution has not been adhering to regulatory provisions.

Pokhara Finance

Pokhara Finance was fined NPR 46,718.23 for failing to maintain the mandatory cash reserve ratio between Magh 13 and 26, 2081. Moreover, Ravi Chandra Gurung, the then CEO of the institution, was fined NPR 500,000 for failing to discharge his duties effectively. His explanation in response to the central bank’s inspection findings was deemed unsatisfactory. As a result, Gurung was dismissed from his post, and Prakash Gurung has been appointed as the new CEO.

Additionally, NRB found Pokhara Finance’s non-performing loans to have reached 33.44% by the end of Poush 2081. Its capital adequacy ratio was also below the regulatory threshold. The institution has been instructed to meet financial indicators within six months under the provisions of the Prompt Corrective Action Regulations, 2074.

Janaki Finance

Similarly, Janaki Finance has been subjected to prompt corrective action under Regulation 3 (Ga) of the same act due to its failure to maintain the minimum capital adequacy ratio as of the end of Mangsir 2081.

NRB’s actions reflect its ongoing efforts to strengthen regulatory compliance and ensure the stability of Nepal’s financial sector.