NRB Takes Action Against Three Major Banks for Rule Violations
The Nepal Rastra Bank (NRB) has taken formal action against three of the country's leading commercial banks NIC Asia Bank, Global IME Bank, and Nepal Investment Mega Bank following reports of regulatory misconduct.
The penalties, which range from heavy cash fines to formal warnings for top executives, were issued after the central bank’s review of the second quarter of the current fiscal year (2082/83).
NRB Enforcement Actions: Q2 FY 2082/83
|
Bank Name |
Subject of Action |
Penalty/Action Taken |
Primary Reason for Action |
|
NIC Asia Bank |
Former Chairman and Former CEO |
Fine of Rs. 200,000 each |
Repeated violation of NRB directives regarding the publication of financial statements and failure to comply with written orders issued by the central bank. |
|
Global IME Bank |
Chief Executive Officer (CEO) |
Formal Caution |
Failure to maintain adequate loan loss provisions (ageing-wise) and non-compliance with loan rescheduling/restructuring rules. Additionally, the core banking software allowed for the re-creation of settled loans using old value dates. |
|
Nepal Investment Mega Bank |
Board of Directors and CEO |
Formal Caution |
Violations including: disbursing loans without customer signatures on security documents, lending beyond collateral limits, maintaining interest rate differences of over 2% for similar loan types, and using new short-term loans for debt recovery in violation of working capital guidelines. |
On-Site Inspections and Direct Statements
The central bank revealed that these issues were not just found in paperwork but were confirmed during physical inspections. For Global IME Bank, the NRB conducted a specific on-site monitoring visit at their head office. During this visit, inspectors discovered a technical loophole in the bank’s computer system that allowed old, settled loans to be "re-created," potentially hiding the true status of unpaid debts.
Speaking on these developments, the Spokesperson of NRB, Mr. Guru Prasad Paudel, clarified that the central bank is simply enforcing the law to protect the stability of the financial system.
"These actions were taken based on the specific details and data provided by the banks to the NRB," said Mr. Paudel. Such actions are mandatory for any bank that violates the rules and laws set forth in the NRB Act.
