24th April 2025, Kathmandu
Nepal Rastra Bank (NRB) has taken supervisory action against five financial institutions. The list includes three development banks—Muktinath Development Bank, Narayani Development Bank, and Salpa Development Bank—and two finance companies—Pokhara Finance and Janaki Finance.
Nepal Rastra Bank Supervision
The Financial Institutions Supervision Department released the third-quarter action report, which highlights violations by these institutions. The report covers actions against board chairpersons, directors, and chief executive officers (CEOs).
Muktinath Development Bank: Chairman Warned
NRB warned Bharat Raj Dhakal, Chairman of Muktinath Development Bank. He joined the bank’s building construction committee, which violates unified directives. As per the rules, a board chairperson cannot join any internal committees or subcommittees. NRB issued a formal warning.
Narayani Development Bank: Capital Requirement Violations
Narayani Development Bank failed to meet key conditions after being removed from the problematic institutions list in 2077 BS. NRB had directed the bank to raise its paid-up capital within two years and maintain proper deposit and lending limits. However, the bank did not meet these conditions.
The bank also exceeded deposit limits from the public and violated single-borrower lending caps. In addition, it failed to maintain the required capital adequacy ratio over time. Consequently, NRB issued a written directive to the board to comply with capital and regulatory requirements by Ashad 2082 BS.
Salapa Development Bank: Capital Shortfall
Salpa Development Bank also failed to meet the minimum required paid-up capital. Despite repeated instructions, the bank did not implement the directives. As a result, NRB issued a formal warning under the NRB Act, 2058.
Pokhara Finance: Multiple Offenses
Pokhara Finance faced three separate actions. First, it failed to maintain the mandatory cash reserve from 13 to 26 Magh 2081 BS. For this, NRB fined the institution Rs. 46,718.23.
Second, the CEO, Ravichandra Gurung, failed to fulfill his management duties. NRB found his explanation unsatisfactory and imposed a fine of Rs. 500,000.
Third, Pokhara Finance’s non-performing loans (NPLs) reached 33.44%. Its capital adequacy ratio also fell below regulatory standards. NRB ordered the institution to meet key financial indicators within six months under prompt corrective action.
Janaki Finance: Prompt Corrective Action
Janaki Finance also faced prompt corrective action. By the end of Mangsir 2081 BS, the institution had not met the minimum capital adequacy ratio. NRB instructed it to correct this promptly.
Final Remarks
NRB has emphasized strict enforcement of financial regulations. These actions highlight its ongoing commitment to maintaining financial discipline in the banking and finance sector. Institutions must now comply with all instructions to avoid further penalties.
For more: Nepal Rastra Bank Supervision