NRB takes PCA against Grand Bank, but no need to panic, says central bank spokesman

ShareSansar, September 10:

Nepal Rastra Bank has initiated Prompt Corrective Action (PCA) againt Grand Bank Nepal Limited for failing to meet the capital adequacy ratio of 10 percent.

“Yes, we have taken PCA against Grand Bank yesterday,” NRB Spokesperson Manmohan Kumar Shrestha told ShareSansar today. “It is to urge the bank to expedite measures to recover risky loans.”

He further said Grand Bank management has been asked to focus on recovery of risky loans and not on expansion of deposit and loan portfolios.

Following the PCA, Grand Bank cannot expand the deposit and loan mobilization by more than 5 percent of the same at the end of the last fiscal year.

It cannot also open new branches, issue bonus shares, and add fixed assets, among other things.

Grand Bank had reported almost 15 times net profit drop in the last fiscal year 2070/71 as it a net loss of Rs 1.6 arba, down from net profit of Rs 11.73 crore at the end of the previous fiscal year 2069/70.

Grand Bank’s profit growth was largely stunted by Rs 1.93 arba it had to provision for possible loss — probably due to its heavy focus on the still-sluggish realty sector. On the other hand, it managed to write back just Rs 5.27crore of the loan it had provisioned for possible loss.

However, the NRB Spokesperson said that the investors and depositors need to realize that Grand Bank has been focusing on improving its condition and things should be alright soon.

“We should always keep in mind that the central bank does not think that it needs to directly intervene or take over the management of Grand Bank,” he added. “Hence there is no need to panic.”