Kathmandu: Nepal Rastra Bank (NRB) has taken regulatory action against two commercial banks — NIC Asia Bank and Citizens Bank — for violating central bank directives during the fourth quarter of the last fiscal year.
According to the Bank Supervision Department of NRB, NIC Asia Bank was found to have increased interest rates contrary to the terms agreed with borrowers. The bank was issued a formal warning for charging higher interest rates than permitted, and for failing to clearly disclose key loan terms such as loan type, applicable interest rate (fixed or variable), and repayment schedule as required by the Unified Directive, 2017.
The central bank noted that NIC Asia altered the interest rate without informing the borrowers, which is against regulatory norms. As a result, the bank has been officially cautioned under Section 100, Subsection 1(a) of the Nepal Rastra Bank Act, 2001.
Similarly, Citizens Bank was found guilty of calculating the interest spread rate incorrectly and issuing new loans to repay existing loan principals and interest — a practice discouraged by NRB regulations. Following these findings, the bank’s Chief Executive Officer has been formally warned.
NRB also revealed that Citizens Bank had delayed payment of bank guarantees even after claims were made, in violation of the timeframe specified in the central bank’s Unified Directive. Moreover, the bank failed to classify certain loans as non-performing and set aside adequate loan loss provisions for long-overdue loans that had been repeatedly extended on a temporary basis.
In addition, the central bank reported that Citizens Bank did not fully comply with the Capital Adequacy Framework, 2022, and provided incorrect reporting on credit disbursement in regulated sectors. These lapses prompted NRB to caution the bank’s CEO under Section 100(2)(a) of the Nepal Rastra Bank Act, 2001.
NRB has reiterated that all financial institutions must adhere strictly to regulatory frameworks to maintain transparency, protect consumer rights, and ensure financial sector stability.
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