Nepal Rastra Bank Takes Action Against Three Commercial Banks

Nepal’s central bank, Nepal Rastra Bank (NRB), has taken supervisory action against three major commercial banks, Prabhu Bank, Rastriya Banijya Bank, and Agriculture Development Bank, for failing to comply with regulatory standards and financial guidelines. As part of these enforcement actions, NRB also imposed a cash fine of Rs 500,000 on Prabhu Bank’s former Chief Executive Officer, Ashok Sherchan.

According to the central bank's Bank Supervision Department, the action against Prabhu Bank and its executive leadership stems from multiple compliance failures. Inspections revealed that the bank failed to adhere to mandatory loan classification rules, did not set aside sufficient funds for potential loan losses, and submitted loan records to the central bank that did not match the data in its internal core banking system. Consequently, the central bank fined Sherchan under Section 100(2)(c) of the Nepal Rastra Bank Act, 2058.

Meanwhile, state-owned Rastriya Banijya Bank was issued a formal caution under Section 100(1)(a) of the NRB Act after it failed to freeze specified bank accounts within required timelines, violating the updated bank account management regulations. Additionally, Agriculture Development Bank was required to sign a written commitment to undertake corrective measures after supervisory audits identified operational deficiencies.

The regulatory body stated that these supervisory actions aim to strengthen institutional governance, maintain transparency in financial reporting, and ensure strict compliance across Nepal's banking sector.