KATHMANDU, May 1: Nepal Rastra Bank (NRB) has imposed a fine of over Rs 140 million on Standard Chartered Bank.
The Standard Chartered Bank has been fined for failing to meet the minimum loan disbursement requirement in the specified sectors.
According to NRB, the bank did not meet the mandated loan disbursement percentage for the designated sectors during the second quarter of fiscal year 2024/25 (up to mid-January 2025). As a result, the central bank has imposed a fine of Rs 148.5 million.
In addition, four other banks, including their Chief Executive Officer (CEOs), have also faced action.
Among them, former chairman of Nepal Bank Limited (NBL), Chandra Bahadur Adhikari, has been fined Rs 500,000 for loan misuse. The bank's CEO, Tilak Raj Pandey, has been issued a warning for failing to perform his duties effectively.
NRB has issued a warning to CEO Pandey for several shortcomings, including failure to effectively implement the bank’s strategic plan, annual budget, and programs as per the agreement between the bank and the CEO. He was also found to have failed in ensuring timely approval and renewal of loans, and in maintaining coordination among senior management staff. The central bank has cautioned him for these issues and let him off with a warning for now.
Similarly, the NRB has issued a warning to Laxmi Sunrise Bank CEO Ajaya Bikram Shah for failing to comply with the central bank’s loan-related directives and for providing loan facilities to a promoter shareholder in violation of regulatory guidelines. The bank has also been penalized for not properly classifying loans and for failing to make adequate loan loss provisions in line with the volume of non-performing loans.
At present, commercial banks have been concealing the rise in non-performing loans by avoiding proper classification and not categorizing them as bad loans.
The NRB took action against the banks after discovering that they had ignored stricter loan classification requirements and had been classifying inactive (non-performing) loans as active ones, thereby failing to manage loan loss provisions properly.
It has issued a warning to Kumari Bank CEO Ram Chandra Khanal for failing to classify non-performing loans and watchlist loans properly. The central bank has cautioned him not to repeat such actions.