Among the financial institutions to be prosecuted are Citizens Bank International, NIC Asia Bank, Pokhara Finance and Guheshwari Merchant Banking and Finance Company.
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Nepal Rastra Bank has taken action against four banks and financial institutions that worked against the rules in the fourth quarter of the last financial year. Among the financial institutions to be prosecuted during this period are Citizens Bank International, NIC Asia Bank, Pokhara Finance and Guheshwari Merchant Banking and Finance Company.
According to the National Bank, the management of Citizens Bank has been alerted to the fact that contrary to the instructions, the contract agreement of the chief executive officer of the bank has been amended and the facilities of the chief executive officer have been increased, and the internal auditor has not conducted a detailed study regarding the use of credit under the Citizens Fast Track Loan.
"Citizens Bank International has amended the contract agreement of the chief executive officer of the bank contrary to the provisions of point 4(13) of the integrated instruction No. 6 issued by the Rashtra Bank and has increased the facilities of the chief executive officer. The board of directors of the Citizens Bank has been alerted because it did not follow the instructions given by this bank to conduct a detailed study by the internal auditor regarding the use of loans under the Citizens Fast Track Loan," the Rashtra Bank said.
The National Bank has also found that the bank has calculated the interest rate gap incorrectly. The National Bank has also found that citizens paid off old loans and interest by issuing new loans, did not pay the bank guarantee claimed against the instructions of the regulatory body within the specified time period, extended the deadline continuously for a long time and did not maintain the loan loss system based on the maturity period of the loans.
"The Chief Executive Officer of Citizens Bank International has been alerted for not fully complying with the current capital loan guidelines issued by Rashtra Bank in 2079, and wrongly reporting loans in specified areas," the action letter of Rashtra Bank said.
NIC Asia is another commercial bank that will be targeted by Rashtra Bank in the fourth quarter. According to the National Bank, the action was taken after it was found that the borrowers were charged more interest against the instructions of the National Bank, the type of loan, the applicable interest rate (fixed/variable), and installment arrangements were not followed when entering into a loan agreement with the borrower. "Since the type of loan, applicable interest rate, installment arrangements have not been mentioned in simple and clear language and information about the change of interest rate has not been given to the borrower, NIC Asia Bank has been alerted in accordance with subsection 1 (a) of section 100 of the Nepal Rashtra Bank Act, 2058," said the action letter.
Pokhara Finance has also come under Rashtra Bank's action in the fourth quarter. In the last financial year, the National Bank has taken action against this organization for the fifth time. Rastra Bank has informed that the organization has been penalized due to insufficient cash balance as specified. "For the period from January 27 to March 23, 2081, a fine of 32 lakh 77 thousand 676.35 rupees has been imposed as per the existing provisions for not maintaining the minimum mandatory balance," said the National Bank.
The Rastra Bank has taken action against Guheshwari Merchant Banking and Finance after it was found that the report submitted to the regulatory body regarding the organization's loss arrangement and classification was flawed and that the debt was regularized by providing additional loans to recover the outstanding interest/installment of some loans. Rastra Bank has informed the Chief Executive Officer of this organization as a measure of action. The National Bank has stated that due to the mentioned reasons, the loan loss system has been affected and the financial statements of the organization are not realistic.
Rastra Bank has alerted Guheshwari Merchant Banking and Finance Board Chairman Yuvraj Bhandari, members Sajina Amatya and Dipesh Gorkhali through separate letters saying that this organization has appointed fraudulent directors in the Annual General Meeting.
"In violation of the provisions of the Banking and Financial Institutions Act, 2073, the organization did not appoint vacant directorships before the annual general meeting, did not go through the election process for the appointment of vacant directors in the annual general meeting, and appointed directors from the board of directors only after the conclusion of the annual general meeting, so it has been warned through a separate letter in accordance with the law.
Reshma Shrestha, a member of the board of directors, has been alerted to the fact that the amendment to the staff regulations of the organization was implemented without approval from the National Bank against the directives of the regulatory body.
Rashtra Bank has alerted Mr. Shrestha, ex-executive committee chairman of Guheshwari Merchant Banking and Finance, ex-members Sarojni Shrestha and Rajesh Manandhar. During the period when the board of directors of the organization was the chairman, the amendment made in the staff regulations of the organization regarding the gratuity of the employees in accordance with the provisions of section 133 of the Bank and Financial Institutions Act, 2073 was implemented without the approval of the National Bank.
