Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB) has taken action against Sindhu Bikas Bank for violating regulatory provisions. According to the fourth quarter supervision report of the fiscal year 2080/81 made public by the Department of Bank Supervision, the bank has been found to be facing serious weaknesses in the implementation of corporate governance, capital fund and regulatory directives.
According to the Rastra Bank, the bank has started the process related to bank acquisition against the Integrated Directive, 2080. It has been found to have violated regulatory provisions by purchasing shares worth Rs 25 million and issuing loans against personal guarantees. It is also stated in the report that the board of directors has also decided to charge only normal interest on listed loans.
According to the report, these decisions will have an adverse impact on the interest of the institution, depositors, investors and the general public. In addition, the bank has maintained a minimum capital adequacy ratio of less than 11.20 percent.
The report also found that the bank delayed its annual general meeting without completing the auditing of its annual financial statements on time, which was against the Bank and Financial Institutions Act, Company Act and the regulatory provisions of Nepal Rastra Bank.
Based on these weaknesses, Nepal Rastra Bank (NRB) has cautioned the Board of Directors of Sindhu Bikas Bank as per Section 100 of the Nepal Rastra Bank Act, 2058. Necessary directives have also been issued under the Prompt Corrective Action to maintain minimum capital fund ratio and fully comply with the regulatory provisions.
Nepal Rastra Bank (NRB) has directed the banks and financial institutions (BFIs) to strictly adhere to the existing laws, integrated directives and good governance provisions.
