NRB initiates PCA against 2 finance companies, issues warnings to 3 development banks

KATHMANDU, APRIL 24: Nepal Rastra Bank (NRB) has taken regulatory action against three development banks and two finance companies. Yesterday, the central bank initiated Prompt Corrective Action (PCA) against Pokhara Finance and Janaki Finance, and it issued warnings to Muktinath Bikas Bank, Narayani Development Bank, and Salpa Bikas Bank.

Additionally, former CEO of Pokhara Finance, Ravichandra Gurung, has been fined Rs 500,000, and the chairpersons and chief executive officers (CEOs) of the other institutions have been formally warned.

According to NRB, these actions followed monitoring conducted by its Financial Institutions Supervision Department during the third quarter of the fiscal year 2024/2025. The institutions in question were found to be non-compliant with the central bank’s directives.

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Muktinath Bikas Bank

NRB has issued a warning to Bharat Raj Dhakal, the chairman of Muktinath Bikas Bank’s board of directors, for participating as the coordinator of the bank’s Building Construction Committee. This violates NRB’s unified directives, which prohibit a board chairperson from being involved in any internal committee or sub-committee apart from the board itself.

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Narayani Development Bank

The board of Narayani Development Bank has been found repeatedly violating NRB's directives. As a result, the board has received a written order to immediately cease such regulatory breaches.

When the bank was removed from the list of troubled institutions on August 5, 2020 (Shrawan 21, 2077), NRB had imposed conditions including:

• Meeting the minimum paid-up capital within two years,

• Restricting public deposit collection to no more than 100% of paid-up capital, and

• Limiting single borrower exposure to a maximum of 10% of core capital.

However, the bank failed to meet these requirements. It did not reach the required paid-up capital, collected deposits beyond the permitted limit, extended loans exceeding the single-borrower threshold, and mobilized financial resources above the prescribed regulatory ceiling. Accordingly, NRB has taken action.

The central bank has also directed the board to fulfill the required paid-up capital and capital adequacy ratio by July 15, 2025 (Ashadh end, 2082).

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Salpa Bikas Bank

Salpa Bikas Bank has failed to meet the minimum paid-up capital requirement. Despite repeated directives from NRB, the bank has not complied with key regulatory provisions. Therefore, a formal warning has been issued to its board of directors.

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Pokhara Finance

NRB has fined Pokhara Finance Rs 46,718.23 for failing to maintain the required liquidity reserve between January 26 and February 8, 2025 (Magh 13–26, 2081), as per regulatory standards.

Furthermore, former CEO Ravichandra Gurung was found negligent in fulfilling his managerial responsibilities. An on-site inspection report highlighted multiple deficiencies. As his submitted clarification was unsatisfactory, he was fined Rs 500,000 and subsequently dismissed from his position. The board of Pokhara Finance has since appointed Prakash Gurung as the new CEO.

As of January 14, 2025 (end of Poush 2081), the institution’s non-performing loan (NPL) ratio stood at 33.44%, and its capital adequacy ratio fell below regulatory requirements. As a result, NRB initiated Prompt Corrective Actions under Section (Ga) of Regulation 3 of the Prompt Corrective Action Regulations, 2017 (2074 B.S.), requiring the bank to meet the necessary financial indicators within six months.