Nepal Rastra Bank Imposes Disciplinary Measures Against Six Financial Institutions for Regulatory Violations
Nepal Rastra Bank (NRB) has taken stern disciplinary measures against six financial institutions, including Global IME Bank, Prabhu Bank, Himalayan Bank, Muktinath Bikas Bank, Garima Bikas Bank, and Reliance Finance, for violating mandatory regulations.
Global IME Bank (GBIME) is directed to refund excess funds charged as premiums, surpassing the allowed limits. The bank breached regulations by increasing the Risk Premium rate in the fiscal year 2079/80, contrary to the directive. The directive emphasizes the importance of setting aside funds for potential loan losses, addressing issues like misusing loans, inactive businesses, Debt-to-Equity Ratio non-compliance, and inadequate debt recovery.
Prabhu Bank (PRVU) faces penalties for improper loan classification and insufficient risk mitigation systems. Violations include incorrect loan loss categorization, failure to allocate funds for loan recovery, and an increase in the Risk Premium rate against guidelines. Additionally, inaccuracies in reporting loan risks under the Capital Adequacy Framework 2015 were noted.
Himalayan Bank (HBL) is under scrutiny for miscalculating its capital adequacy ratio, resulting in reduced primary capital and reporting higher risk-weighted assets. Despite holding necessary permits, the bank failed to categorize loans and allocate provisions as per Unified Directive 2079, Directive No. 2/079.
Muktinath Bikas Bank (MNBBL) incurs a Rs. 10 lakhs fine for non-compliance with ongoing due diligence. Directors of Garima Bikas Bank (GBBL) and Reliance Finance (RLFL) receive official warnings for regulatory breaches.
Garima Bikas Bank's Director, Dr. Ananda Prasad Shrestha, and others collected funds through a joint account intending to open an insurance company. Despite applications and funds from various institutions, insufficient oversight was noted. Dr. Ananda Prasad Shrestha is cautioned by NRB, and the CEO of the institution is also warned.
Reliance Finance's Chairman, Kush Prasad Mally, and others used joint and personal accounts for individual business transactions. Due to irregular Customer Due Diligence (CDD) updates and perceived weaknesses in institutional and managerial conduct, Chairman Kush Prasad Mally is cautioned by NRB.
