Nepal Rastra Bank Restricts Karnali Development Bank from Collecting Deposits and Issuing Loans
Nepal Rastra Bank (NRB) has imposed restrictions on Karnali Development Bank Limited, based in Nepalgunj, Banke, preventing it from collecting additional deposits, opening new deposit accounts, and issuing further loans. This decision comes in light of the bank's deteriorating financial health.
An inspection conducted by NRB from Shrawan 6 to Shrawan 11, 2081, revealed significant shortcomings in the bank's credit management and loss provisions. The report indicated that the bank failed to maintain the prescribed minimum capital adequacy ratio, while its non-performing loan (NPL) ratio stood alarmingly high at 40.85%.
To safeguard the interests of depositors and the general public, NRB has invoked Regulation 3 of the "Prompt Corrective Action Regulations, 2074". Under this directive, the bank has been given a six-month period to improve its financial indicators. Until then, it is barred from collecting new deposits, opening accounts, or disbursing loans.
This notice has been issued to inform the public about the measures taken to address the bank's financial issues and ensure depositor protection.