Kathmandu. NIC Asia Bank has been consistently ignoring the norms of regulation, transparency and good governance in recent years. The bank, which has to be accountable to lenders and depositors, has been institutionally repeating irresponsible practices by breaking regulatory boundaries for its own benefit.
Banks are repeating the acts of not making transparent agreements with the borrower while giving loans, not giving information about the interest rate changes, and treating customers unevenly. What is even more dangerous is that the bank has repeatedly providing more interest than other customers by giving special benefits to the bank’s directors, their families and related organizations.
According to the rules, the principle of fairness and equality should be followed while opening a fixed account, but the bank has been found to have given dividends against the rules by opening some accounts on the old date. This is not only a reflection of the bank’s internal governance and control system but also regulatory negligence.
The bank is also negligent in sensitive issues such as interest rate, loan loss management, risk burden assessment and is defying the directives of the Rastra Bank. Such practices have not only hurt the interests of the customers but have also increased the risk of distrust in the entire banking system.
Rastra Bank has already taken action against NIC Asia Bank twice in the last fiscal year due to such serious negligence. Recently, the Rastra Bank has warned the bank for charging more interest from the borrowers as per the Unified Directive 2074 BS, not clearly mentioning the necessary details in the loan agreement, and not informing about the change in interest rate.
Earlier, in the second quarter of the last fiscal year, the bank’s directors and their family members were found to be paying more interest than the published rate. Chief Executive Officer Roshan Kumar Neupane, Chairman Tulsiram Agrawal and directors Trilok Chandra Agrawal and Ram Chandra Sanghai were also appointed as per the Rastra Bank Act.
Nepal Rastra Bank (NRB) has directed the banks not to carry out any activities against any rules, prepare a reform action plan and implement it immediately and submit the report on a regular basis as it was found that the directives related to interest rate, loan classification, capital fund, risk burden and institutional good governance were not followed during the regulatory inspection.
Although the warnings and instructions of the Rastra Bank have been coming continuously, NIC Asia Bank does not take it seriously. Experts say that this can prepare the basis for more stringent regulatory action in the future.
In recent times, the overall performance of NIC Asia Bank has also declined. As a result, its business expansion has decreased and non-performing loans are also high. Ceo Neupane had distributed loans arbitrarily in the past, so now the problem is increasing in the bank due to non-payment of that loan. Roshan Neupane, chief executive officer of NIC Asia, has been accused of distributing loans without considering the quality of loans and collateral.
In recent times, NIC Asia Bank seems to be focusing only on auctions. In the past, many loans have become bad due to the inability to recover the loans disbursed arbitrarily. As a result, the bank’s non-banking assets are also increasing. The bank has adopted a policy of sending auction notices and forcibly seizing property if the loan is not raised.
fiscal year 2081. The bank’s net profit declined by 91.81 per cent to Rs 156.7 million in the third quarter of 2018-19. In the same period last year, the profit was more than Rs 1.91 billion. The bank’s non-performing loans stood at 5.75 per cent. It has almost doubled from 3.08 percent last year.
Yes Bank is also the weakest among other banks in financial indicators. As of Mid-March, the bank’s earnings per share was the lowest among commercial banks at Rs 1.41. The bank also has the lowest ROE till mid-March.
NIC Asia Bank has a ROE of less than 1 percent i.e. 0.71 percent. The bank’s net profit is negative at Rs 902.2 million.
