Nepal Rastra Bank Takes Action Against Five Commercial Banks

Nepal Rastra Bank (NRB) has taken regulatory action against five commercial banks for violating banking rules during the third quarter of the fiscal year 2081/82 (2024/25). The actions include fines and warnings to the Chief Executive Officers (CEOs) of these banks.

Banks Under Action

The five banks that faced penalties are:

• Rastriya Banijya Bank

• Kumari Bank

• Laxmi Sunrise Bank

• Nepal Bank Limited

• Standard Chartered Bank Nepal

Summary Table of Actions Taken

Details of Violations and Actions Taken

1. Standard Chartered Bank Nepal

• Fine Imposed: Rs. 14,85,25,566

• Reason: Failed to meet the minimum lending requirement in specific sectors.

2. Nepal Bank Limited

• Fine Imposed: Rs. 500,000

• Reason: Former board chairman Dr. Chandra Bahadur Adhikari misused his position for personal gain.

• Violation: Breach of NRB’s Unified Directive.

3. Rastriya Banijya Bank

• Action: The CEO warned

• Issues Identified:

  1. Some loans are not classified under the “watch list.”

  2. Improper loan classification based on overdue periods

  3. Inadequate loan loss provisioning

  4. Incorrect risk weight calculation under the Capital Adequacy Framework 2015

  5. Incomplete compliance with guidelines for working capital loans

4. Kumari Bank

• Action: The CEO warned

• Issues Identified:

  1. Failed to classify non-performing loans (NPLs)

  2. Did not maintain minimum loan loss provisioning

5. Laxmi Sunrise Bank

• Action: The CEO warned

• Multiple Issues Identified:

  1. Provided indirect credit facilities to a promoter through overdrawn current accounts

  2. Issued long-term loans under the working capital loan category by misinterpreting the loan policies

  3. Offered periodic loans even for margin loan purposes

  4. Did not manage risks in time for personal and corporate loans

  5. Applied irregular repayment schedules, with minimal early installments and large final ones

  6. Approved credit product papers without board approval

  7. Allowed a promoter holding more than 2% shares to pledge founder shares as collateral for a loan from another bank without seeking NRB’s approval or recording the loan

Conclusion

Nepal Rastra Bank‘s recent actions show its commitment to enforcing regulatory compliance in the banking sector. These steps aim to strengthen financial discipline, improve transparency, and ensure the long-term stability of Nepal’s economic system.