Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB) has taken action against two development banks for violating regulatory provisions.
In the first quarter of the current fiscal year, the government has taken action against Lumbini Bikas Bank and Saptakoshi Development. The central bank has warned Lumbini Bikas Bank and taken action against Saptakoshi Development Bank under three headings.
According to the NRB, the Board of Directors of Lumbini Bikas Bank had violated the provisions of Section 29 (7) of the Bank and Financial Institutions Act, 2073 by increasing the facilities mentioned in the date of reappointment of the CEO for the second term. For this reason, the then Board of Directors of the bank has been warned as per clause (a) of Section 100 of the Rastra Bank Act, 2058.
Similarly, the report prepared after an on-site inspection found that the capital fund ratio of the institution was 42.7 percent less than the 10 percent minimum capital fund ratio determined by the Nepal Rastra Bank while adjusting the credit loss arrangement added by Saptakoshi Development Bank. As per the latest financial report of Ashad 2082, the minimum capital fund ratio is 7.51 percent, which is 24.9 percent lower than the minimum capital fund ratio fixed by the Rastra Bank.
In the field inspection report, 2081 BS, the bank’s Chief Executive Officer Dinesh Kumar Pokharel was found to have extended the deadline in the core banking system of the bank without obtaining the required documents, the details related to loan loss management were not realistic and the reporting done to the Rastra Bank was not credible and the directives of the Rastra Bank were not followed. g.
A written order has been issued to the Board of Directors of the bank as per Section 100 (c) of the Rastra Bank Act, 2058 BS to prevent the recurrence of the mistakes and situations mentioned in the report and to be responsible for rectifying the shortcomings found during the field inspection.
