Nepal Rastra Bank has made public the disciplinary actions taken against three ‘A’ class commercial banks for the fourth quarter of the fiscal year 2082/83.
The central bank recently released details of its regulatory actions against licensed ‘A’ class banks. During this period, three major commercial banks – Rastriya Banijya Bank, Agricultural Development Bank, and Prabhu Bank Limited – faced penalties for various non-compliance issues.
Actions Taken Against Banks
Rastriya Banijya Bank Limited
According to the central bank, Rastriya Banijya Bank Limited was warned for violating the Bank Account Freezing and Release Regulations, 2081. The bank failed to freeze bank accounts on time, which led to a caution under Section 100(1)(a) of the Nepal Rastra Bank Act, 2058. This action aim to ensure future compliance with banking procedures.
Agricultural Development Bank Limited
Similarly, Agricultural Development Bank Limited also received a warning. A special on-site inspection revealed that the bank did not timely freeze bank accounts when requested by Nepal Rastra Bank and law enforcement agencies. Consequently, the bank was advised to operate strictly according to the regulations in the future.
Prabhu Bank Limited
Prabhu Bank Limited faced much stricter actions from Nepal Rastra Bank. The central bank noted serious weaknesses found during comprehensive on-site inspections which were not addressed in time. Furthermore, expected improvements on issues pointed out in previous inspection reports were not seen.
As a result, the Board of Directors of Prabhu Bank was made to sign an agreement committing to take corrective measures, as per Section 100(1)(b) of the Nepal Rastra Bank Act, 2058.
In addition to this, the then Chief Executive Officer of Prabhu Bank, Ashok Sherchan, was fined 5 lakh rupees. This penalty, imposed under Section 100(2)(g) of the Nepal Rastra Bank Act, 2058, was due to several reasons. These included failing to follow loan classification directives, not maintaining enough loan loss provisions, and having differences in loan details submitted to the central bank compared to the bank’s core banking system records.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
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