KATHMANDU: Nepal Rastra Bank (NRB) has issued warnings to the Chief Executive Officers (CEOs) of seven development banks for the misuse of refinancing, business continuity loans, and concessional loans.
The warning, issued under Section 100 of the Nepal Rastra Bank Act, 2002, affects Lumbini, Mahalaxmi, Kamna, Muktinath, Salpa, Garima, and Saptakoshi development banks.
The Financial Institutions Supervision Department of NRB revealed that the warnings were based on a report submitted by a consultant who studied the utilization of loans disbursed by these institutions.
The report highlighted improper usage of concessional loans, which were either misused or suspected of misuse, as identified by the banks’ internal auditors.
In addition to the warnings, Nepal Rastra Bank has also taken action against two development banks and two finance companies.
Garima Bikas Bank was warned for disbursing overdraft loans to blacklisted borrowers. Furthermore, the NRB has declared Karnali Bikas Bank problematic and assumed control of its management, according to the notice issued by the bank.
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