KATHMANDU: Nepal Rastra Bank (NRB) has taken action against eight microfinance institutions, along with their boards of directors and chief executive officers, for violating regulatory directives and prudential standards during the third quarter of the fiscal year 2024/25.
The Microfinance Institutions Supervision Department said the action was taken against institutions that failed to maintain sound corporate governance and exhibited weak financial indicators. The central bank has imposed prompt corrective measures on some institutions while issuing warnings to others.
According to the NRB, five microfinance institutions were subjected to prompt corrective action under the Prompt Corrective Action Bylaws, 2017, after their capital adequacy ratios fell below the regulatory minimum. The affected institutions are Aarambha Chautari Laghubitta, with a capital adequacy ratio of 7.775 percent, Ganapati Laghubitta (6.065 percent), Samudayik Laghubitta (6.125 percent), Nerude Mirmire Laghubitta (6.015 percent), and CYC Nepal Laghubitta (6.205 percent).
The central bank also issued warnings over breaches of corporate governance and financial discipline. It said the board of Dhaulagiri Laghubitta reinstated a deputy chief executive officer in violation of the institution’s employee service regulations and approved salary and benefits without sufficient justification.
Similarly, the board of CYC Nepal Laghubitta was cautioned for failing to comply with spending limits and approval procedures outlined in its financial administration regulations while purchasing vehicles.
Nerude Mirmire Laghubitta Chief Executive Officer Bhojraj Basyal was also warned for reversing loan loss provisions worth Rs 815.5 million without adequate basis, recognizing the amount as income, and using accounting practices that violated Nepal Rastra Bank directives.
The NRB has directed all the institutions concerned to ensure full compliance with regulatory standards and refrain from repeating such violations in the future.
Comment