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:
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Rastriya Banijya Bank
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Kumari Bank
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Laxmi Sunrise Bank
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Nepal Bank Limited
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Standard Chartered Bank Nepal
Summary Table of Actions Taken
Details of Violations and Actions Taken
1. Standard Chartered Bank Nepal
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Fine Imposed: Rs. 14,85,25,566
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Reason: Failed to meet the minimum lending requirement in specific sectors.
2. Nepal Bank Limited
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Fine Imposed: Rs. 500,000
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Reason: Former board chairman Dr. Chandra Bahadur Adhikari misused his position for personal gain.
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Violation: Breach of NRB’s Unified Directive.
3. Rastriya Banijya Bank
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Action: The CEO warned
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Issues Identified:
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Some loans are not classified under the “watch list.”
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Improper loan classification based on overdue periods
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Inadequate loan loss provisioning
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Incorrect risk weight calculation under the Capital Adequacy Framework 2015
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Incomplete compliance with guidelines for working capital loans
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4. Kumari Bank
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Action: The CEO warned
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Issues Identified:
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Failed to classify non-performing loans (NPLs)
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Did not maintain minimum loan loss provisioning
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5. Laxmi Sunrise Bank
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Action: The CEO warned
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Multiple Issues Identified:
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Provided indirect credit facilities to a promoter through overdrawn current accounts
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Issued long-term loans under the working capital loan category by misinterpreting the loan policies
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Offered periodic loans even for margin loan purposes
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Did not manage risks in time for personal and corporate loans
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Applied irregular repayment schedules, with minimal early installments and large final ones
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Approved credit product papers without board approval
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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
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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.