Kathmandu. Nepal Rastra Bank has taken action against 5 commercial banks including Standard Chartered Bank. The Rastra Bank has taken action against Standard Chartered Bank, Nepal Bank, Laxmi Sunrise Bank, Kumari Bank and Rastriya Banijya Bank. This is the first time that the Rastra Bank has taken action against all these banks in the third quarter.
Which bank and what action?
Standard Chartered Bank
The central bank has taken action against Standard Chartered Bank for violating regulatory provisions. According to the National Bank, the bank has been fined Rs 148.5 million 25 thousand 566.87. The National Bank has stated that the cash fine was imposed on Standard Chartered Bank for disbursing loans below the minimum percentage required to be disbursed in the specified areas by the middle of the current fiscal year.
Nepal Bank
The National Bank has taken action for failing to effectively implement the strategic plan, annual budget and program of the bank, failing to effectively align the budget and program with the strategic plan, and failing to approve and renew loans on time, as per the agreement between Nepal Bank and the bank’s Chief Executive Officer.
Similarly, as it was observed that there was no mutual coordination among the employees at the higher management level, the Rastra Bank has warned the Chief Executive Officer of Nepal Bank Limited in accordance with Sub-section (2) (a) of Section 100 of the Nepal Rastra Bank Act, 2058.
Similarly, the then Chairman of the Board of Directors of Nepal Bank Limited, Dr. Chandra Bahadur Adhikari, misused his position and name to engage in activities for personal gain, in violation of the provision mentioned in Sub-section No. 5 of Point No. 1 of Directive No. 6/080 of the Integrated Directive 2080 issued by Nepal Rastra Bank to licensed institutions, ‘A director shall not misuse his position and name to engage in any type of activity for personal gain.’ The National Bank has decided to impose a fine of 500,000 rupees in cash as per (c) of Sub-section (2) of Section 100 of the Nepal Rastra Bank Act, 2058 BS.
Lakshmi Sunrise Bank
For not complying with the provisions of Clause (c) of Sub-section (1) of Section 50 of the Banks and Financial Institutions Act, 2073 BS and the instructions issued by Nepal Rastra Bank to banks and financial institutions, the Chief Executive Officer of Lakshmi Sunrise Bank Limited has been given a warning as per Clause (a) of Sub-section 2 of Section 100 of the Nepal Rastra Bank Act, 2058 BS.
(a) In accordance with the provisions of Clause (c) of Sub-section (1) of Section 50 of the Banking and Financial Institutions Act, 2073, a bank’s director, a person holding one percent or more of the paid-up capital, a chief executive officer or a family member of such a person or a managing agent or a person authorized to nominate a director, a firm, company or institution, a firm, company or institution with significant ownership or financial interest in the firm, company or institution, has been prohibited from providing any type of loan or facility, and if the call account and current account of the founder of the bank are operating in the same bank, the daily balance in the current account on various dates remains negative, thus providing loan facilities indirectly against the rules.
(b) Laxmi Sunrise Bank has misinterpreted the integrated directives issued by the National Bank and the provisions of the bank’s credit policy and loan product papers, provided long-term term loans for working capital loans, provided term loans for margin loan purposes, without managing the risks inherent in the loans in a timely manner, and has set lump sum installments for personal term loans and large business organizations that have been in operation for a long time, and set loan installments in such a way that the initial years of the loan period are extremely low and the maximum principal is recovered in the final years, while the policy-based loan product papers are approved by the Chief Executive Officer, and provided bridge gap loans for working capital loans and converted bridge gap loans into term loans after a long time, so that the management is not found to be serious in credit risk management.
(c) As per the provisions of Sub-section 930 of Section 11 of the Banking and Financial Institutions Act, 2073 and Sub-sections (c) and (d) of Point No. 18 of Integrated Directive No. 2.(8) of 2080 issued by the Rastra Bank, Lakshmi Sunrise Bank is required to obtain the approval of this bank before pledging shares for a loan for a founding shareholder. However, when a founding shareholder holding more than two percent of the bank’s shares took a loan from Nepal Investment Mega Bank by pledging the founder shares of Lakshmi Sunrise Bank and the bank did not keep records of the utilization of the loan without obtaining the approval of the Rastra Bank.
Kumari Bank
It has been found that the micro-monitored loans and non-performing loans have not been classified as per Sub-section (2) of Section (a) of Point No. 1 of Directive No. 2 of Integrated Directive, 2081, and that the minimum loan loss provision has not been maintained as per Section (1) of Point No. 9 of the same directive, and therefore the Chief Executive Officer of Kumari Bank has been warned as per Section (a) of Sub-section (2) of Section 100 of the Nepal Rastra Bank Act, 2058.
National Commercial Bank
Some loans have not been classified in the micro-monitoring category as per point no. 1 (a) 920 and points no. (93) and (4) of the Integrated Directive 2080 issued by the National Bank, some loans have not been classified on the basis of the period during which the loan has exceeded the limit as per point no. 1 (b) of the same directive, loan loss provision has not been established on the basis of the loan arrears period as per sub-point no. (1) of point 9 of the same directive, while calculating the risk weight of some loans, risk weight has not been calculated as per the Capital Education Framework, 2015 issued by this bank and working capital issued by this bank The Chief Executive Officer of Rastriya Banijya Bank has been warned pursuant to Clause (a) of Sub-section 2 of Section 100 of the Nepal Rastra Bank Act, 2058 BS, as some of the provisions of the Credit Guidelines, 2079 BS (Second Amendment) have not been fully complied with.
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