Nepal Rastra Bank Takes Regulatory Action Against Himalayan Bank Limited
15th May 2026, Kathmandu
The central bank of Nepal, Nepal Rastra Bank, has initiated formal regulatory action against Himalayan Bank Limited after identifying multiple systemic violations during a comprehensive supervisory inspection.
NRB Himalayan Bank Action
The enforcement measures were executed by the Bank Supervision Department during the third quarter of the fiscal year 2082/83. This development highlights the central bank intensifying efforts to maintain financial discipline and ensure that all commercial banking operations strictly align with national regulatory frameworks designed to protect the domestic economy.
Formal Warnings Issued To Bank Executive Leadership
As part of the direct enforcement procedures, Nepal Rastra Bank has issued a formal warning to the Chief Executive Officer of Himalayan Bank alongside a separate official warning addressed to the entire Board of Directors. In addition to these warnings, the central bank has legally required the board to draft and submit an official commitment letter outlining the specific corrective measures they intend to implement. The regulatory body stated that these actions were made necessary due to repeated instances of non compliance with explicit guidelines and frameworks issued to licensed financial institutions.
Serious Regulatory Violations Identified During Field Inspection
The supervisory inspection conducted by the central bank team unearthed a wide variety of operational irregularities that compromised the bank risk management protocols. According to the official findings, the inspection uncovered improper discounting practices that were being applied selectively to specific favored borrowers. Furthermore, the central bank noted a clear misuse of interest rate concessions within loan repayment structures, alongside unauthorized loan restructuring that failed to include the proper classification of overdue principal amounts, creating an inaccurate picture of the institution asset health.
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Failure To Maintain Mandated Capital and Loan Provisions
Beyond restructuring issues, the inspection report detailed significant failures regarding financial safety cushions. Himalayan Bank failed to maintain adequate loan loss provisioning and improperly classified multiple non performing loans. The central bank also discovered that the commercial bank had been extending repayment periods for certain borrowers over a prolonged period without proper justification. Most critically, the institution failed to classify loans that were overdue by more than 90 days as non performing, a practice that directly violates the Unified Directive 2081 issued to licensed entities.
Legal Basis Invoked By The Central Bank
To enforce these penalties, Nepal Rastra Bank invoked specific provisions embedded within the Nepal Rastra Bank Act, 2058, which was later amended in 2073. Specifically, the central bank utilized Section 100, Sub-section 2 (a) to issue the warnings to the executive leadership and the board. Additionally, under Sub-section 1 (b) of the same act, the regulatory authority mandated the submission of the board commitment letter, providing a solid statutory foundation for the state intervention into the internal governance of the commercial institution.
Demands For Comprehensive Governance and Compliance Overhaul
The central bank has instructed the leadership of Himalayan Bank to implement immediate, sweeping corrective measures to ensure total compliance with national regulatory standards moving forward. This regulatory intervention is reflective of the central bank broader strategy to eliminate bad banking practices, improve risk management, and restore public confidence in the banking sector of Nepal. Stakeholders and industry analysts expect that this high profile enforcement action will serve as a strong warning to other commercial financial institutions to maintain strict compliance with the central bank directives.
For More: NRB Himalayan Bank Action
