Nepal Rastra Bank (NRB) has selected 10 major commercial banks for a full audit of their loan portfolios, following recommendations from the International Monetary Fund (IMF). The move aims to assess the financial health and loan quality of these institutions as of mid-April this year.
The selected banks are Global IME Bank, Nabil Bank, Nepal Investment Mega Bank, Rastriya Banijya Bank, Kumari Bank, Laxmi Sunrise Bank, Prabhu Bank, Nepal Bank Limited, Himalayan Bank, and NIC Asia Bank.
The NRB has appointed Bangladeshi audit firm Howladar Yunus & Co. to conduct the assessment. According to Roshan Kumar Sigdel, NRB’s executive director, the central bank plans to sign an agreement with the firm by the end of this week, granting it three months to complete the review.
The IMF required the auditing of these large banks as a condition for releasing its fourth installment to Nepal under the Extended Credit Facility (ECF). Approved in mid-January 2022, the ECF provides Nepal with USD 398.8 million in concessional loans over four years to support economic stability, particularly during and after the COVID-19 pandemic.
In its February 2023 statement, the IMF noted that the asset quality of Nepali banks had weakened due to reduced borrower repayment capacity, higher lending rates, and increased leverage. However, it acknowledged that banks’ capital adequacy ratios remained above regulatory requirements.
