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
| Bank Name | Fine (Rs.) | Action Taken | Key Violation(s) |
|---|---|---|---|
| Standard Chartered Bank | 14,85,25,566 | Fine | Did not meet the sectoral lending requirement |
| Nepal Bank Limited | 500,000 | Fine | Misuse of position by former board chair; violation of NRB Unified Directive |
| Rastriya Banijya Bank | None | CEO Warned | Improper loan classification, provisioning, and risk weight calculation |
| Kumari Bank | None | CEO Warned | Failed to classify non-performing loans and maintain minimum provisions |
| Laxmi Sunrise Bank | None | CEO Warned | Policy violations, improper loan structuring, unauthorized approvals, and founder share misuse |
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:
-
Some loans are not classified under the “watch list.”
-
Improper loan classification based on overdue periods
-
Inadequate loan loss provisioning
-
Incorrect risk weight calculation under the Capital Adequacy Framework 2015
-
Incomplete compliance with guidelines for working capital loans
-
4. Kumari Bank
-
Action: The CEO warned
-
Issues Identified:
-
Failed to classify non-performing loans (NPLs)
-
Did not maintain minimum loan loss provisioning
-
5. Laxmi Sunrise Bank
-
Action: The CEO warned
-
Multiple Issues Identified:
-
Provided indirect credit facilities to a promoter through overdrawn current accounts
-
Issued long-term loans under the working capital loan category by misinterpreting the loan policies
-
Offered periodic loans even for margin loan purposes
-
Did not manage risks in time for personal and corporate loans
-
Applied irregular repayment schedules, with minimal early installments and large final ones
-
Approved credit product papers without board approval
-
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.