Kathmandu – Nepal Rastra Bank (NRB), the central regulatory authority, has taken action against five commercial banks in the third quarter of the current fiscal year for violating regulatory directives. The penalized banks include Rastriya Banijya Bank, Kumari Bank, Laxmi Sunrise Bank, Nepal Bank, and Standard Chartered Bank.

The actions were taken by the Bank Supervision Department of NRB against board chairpersons, directors, and chief executive officers (CEOs) for non-compliance with various regulatory standards. Officials from NRB noted an increasing tendency among bank directors to defy regulatory norms, prompting stricter enforcement.

Violations by Banks in Q3

Rastriya Banijya Bank was penalized for failing to properly classify certain loans under the “watch list” category. According to NRB’s Integrated Directive 2080, the bank failed to classify overdue loans correctly, did not provision loan losses based on overdue durations, and miscalculated risk weights contrary to the Capital Adequacy Framework 2015.

Kumari Bank was penalized for not classifying non-performing loans and failing to maintain the minimum loan loss provision as required by the Integrated Directive 2081. As a result, the bank’s CEO was officially warned under the Nepal Rastra Bank Act, 2058.

Laxmi Sunrise Bank faced penalties for multiple regulatory violations, including:

• Operating call and current accounts for its promoters with negative daily balances, effectively offering indirect credit facilities.
• Approving credit products without board consent, a breach of governance norms.
• Misusing short-term “bridge gap” loans by later converting them into long-term credit—raising serious concerns over credit risk management.

NRB issued an official warning to the bank’s CEO under the NRB Act, 2058 for these practices.

Former Chairperson of Nepal Bank Penalized

Dr. Chandra Bahadur Adhikari, former chairperson of Nepal Bank Limited, was fined NPR 500,000 for allegedly misusing his position for personal gain. NRB regulations prohibit board members from engaging in any activity that leverages their title or role for individual benefit. Dr. Adhikari’s actions were deemed to have violated this provision, prompting the fine under the NRB Act, 2058.

Massive Fine for Standard Chartered

Standard Chartered Bank Nepal was fined NPR 148.5 million (approximately 14 crore 85 lakh) for failing to meet the minimum lending threshold in designated sectors as mandated for the second quarter of the fiscal year 2081/82 (ending in Poush 2081). The central bank found the bank’s lending ratio to be below the required sectoral allocation, leading to the significant monetary penalty.

These enforcement actions by NRB highlight the central bank’s intent to strengthen regulatory compliance and reinforce good governance practices in the banking sector.