NRB Takes Action Against Saptakoshi and Lumbini Development Banks

Nepal Rastra Bank (NRB) has taken regulatory action against Saptakoshi Development Bank and Lumbini Bikas Bank following its recent inspection report for the first quarter of the current fiscal year. Saptakoshi has been placed under prompt corrective action after failing to maintain the required Capital Adequacy Ratio (CAR), while Lumbini’s board has been cautioned for revising the service facilities of its CEO in violation of regulatory provisions.

The central bank found that Saptakoshi’s CAR stood at 7.51% as of Ashad-end 2082, which is 24.9% lower than the mandatory 10% threshold. Even after adjustments for loan loss provisions, the bank’s capital ratio remained below the required level in the previous fiscal year as well. NRB’s report further pointed out issues such as loan term extensions without proper documentation, unreliable loan loss data, and failure to comply with reporting standards. Consequently, CEO Dinesh Kumar Pokharel has been formally warned, and the board of directors instructed to strengthen internal governance.

In the case of Lumbini Bikas Bank, NRB discovered that the board had increased the CEO’s benefits shortly after his reappointment for a second term, which breached regulatory norms. As a result, the central bank issued a caution notice to the former board members, directing them to prevent such non-compliance in the future and to ensure transparency in executive compensation decisions.