Kathmandu. Nepal Rastra Bank (NRB) has taken action against 11 different finance companies in the last fiscal year.

Nepal Rastra Bank (NRB) has taken action against 11 finance companies in the last fiscal year. Janaki Finance, Gurkhas, Progressive, Reliance, Pokhara, Central, Samriddhi, ICFC, Reliable, Goodwill and Guheshwori Merchant Banking and Finance are among the finance companies that have taken action by the Rastra Bank in the last fiscal year.

According to the NRB, dual action has been taken against seven finance companies. The Rastra Bank has taken action against Pokhara Finance six times. In the first quarter of the last fiscal year, rastra bank took action against Janaki Finance, Gurkha’s Finance, Progressive Finance and Reliance Finance. Rastra Bank’s Bank, Financial Institution Supervision Department has taken action against the chairman, director and chief executive officer of the organization.

In the first quarter of the last fiscal year, the directors and CEO of Janaki Finance were alerted. Finance had submitted the details of the balance sheet and profit and loss account against the provisions of Section 59 of the Banks and Financial Institutions Act, 2073, Section 76 of the Companies Act, 2063 and the Unified Directive issued by the Central Bank, 2080. As a result, the board of directors and CEO of the organization have been alerted in accordance with clause (a) of Sub-section (2) of Section 100 of the Rastra Bank Act, 2058, as it has been found to be violating the existing legal and regulatory provisions of this bank by delaying the annual general meeting of the organization.

Similarly, Gurkhaj Finance has found that the directors and employees of the organization should not be directly or indirectly involved in the transactions with the customers having financial interests in the unified directive, but contrary to this provision, the employees of the organization and the then chairman-director of the organization have been repeatedly involved in financial transactions through the accounts opened in the organization itself.

It has been found that the then chairman-director had made financial transactions with them time and again by providing various loans to the employees of the cooperative society in which he was involved. It was found that the management and board of directors did not keep the monitoring work efficient and the board oversight was weak. As a result, the Board of Directors and the Chief Executive Officer of the organization have been alerted in accordance with clause (a) of Sub-section (2) of Section 100 of the Rastra Bank Act, 2058.

Similarly, progressive finance company has been found to have submitted the details of its balance sheet and profit and loss account to the central bank late in violation of the provisions of Section 59 of the Bank and Financial Institutions Act, 2073, Section 76 of the Companies Act, 2063 and the Unified Directive issued by the Rastra Bank, 2080. As a result, the Board of Directors and the Chief Executive Officer of the organization have been alerted in accordance with clause (a) of Sub-section (2) of Section 100 of the Nepal Rastra Bank Act, 2058.

Nepal Rastra Bank (NRB) has imposed a cash penalty on Reliance Finance.

The penalty has been imposed as there is no mandatory cash reserve. Section 47 of the Nepal Rastra Bank Act, 2058 and the E.P. Issued by this bank have not been maintained for the first time as the organization has not maintained the mandatory reserve amount to be maintained as per the regulatory provisions during the period from September 29, 2081 to September 1, 2081. Sub-points 3, 4 and 5 of point no. 1 of direction no. 13-080 and e.p. Direction No. Point No. 21-80. As per the provisions of Section 7 (including amendment), the organization has been fined Rs 11,227 in cash.

Similarly, in the second quarter of the last fiscal year, the Rastra Bank had taken action against eight finance companies for committing the same kind of mistake. According to the central bank, action has been taken against Samriddhi Finance, Pokhara Finance, Progressive Finance, ICFC Finance, Janaki Finance, Central Finance, Reliance Finance and Goodwill Finance.

In the report submitted by the consultant appointed to study the utilization of eight finance refinancing, business continuity loans and concessional loans, the concerned organization has prepared the internal audit of the institution and submitted to the central bank regarding the loans disbursed by the institutions. The directive issued by the bank has been violated. As a result, the CHIEF Executive Officers of eight finance companies have been alerted in accordance with clause (a) of Sub-section 2 of Section 100 of the Nepal Rastra Bank Act, 2058.

In the third quarter of the last fiscal year, the Rastra Bank had imposed a cash penalty on Pokhara Finance and taken action. The finance company had imposed a fine of Rs 46,718 for not providing the required cash reserves. The organization has imposed a fine of Rs 46,718 for not maintaining the mandatory reserve amount to be maintained as per the regulatory provisions during the period from February 13 to 26, 2018.

During the same period, the CEO, who is in charge of the overall management of the organization, has not fulfilled his responsibilities in the context of the shortcomings pointed out in the report of the central bank’s macro-site inspection. According to the central bank, gurung was fined Rs 500,000 as per clause (c) of sub-section (2) of Section 100 of the Rastra Bank Act, 2058.

Pokhara Finance had taken immediate corrective action as per clause (c) of Regulation 3 of The Bank and Financial Institutions Regulations, 2074 BS, with the condition that the financial indicators of the institution should be maintained within six months as per the directive as the non-performing loan was 33.44 percent in mid-January 2081.

Similarly, Janaki Finance has taken immediate corrective action as per clause (c) of Regulation 3 of the Bank and Financial Institutions Regulations, 2074 BS as the minimum capital fund ratio is not in line with the regulatory standards in mid-November 2081. In the third period of the current fiscal year, Gorkhaj Finance has not complied with the provision of filling up the post of CHIEF Executive Officer within three months of the vacancy.

It has been found that the board of directors is not sensitive to the complaints and complaints received repeatedly by various concerned bodies, due to lack of mutual understanding among the directors.

According to the central bank, the board of directors and board members of the organization have been alerted as per clause (a) of Sub-section (2) of Section 100 of the Nepal Rastra Bank Act, 2058 as the institutional good governance has been weakened due to non-appointment of CEO in accordance with the procedures formulated by them. Yubaraj Rai, Narendra Kumar Agrawal, Neelam Bohara and Kalpana Khapung are the members of the board of directors.

The central bank has continued to take action against the finance company in the fourth quarter of the last fiscal year. In the fourth quarter of the last fiscal year, Pokhara Finance was fined millions of rupees. According to the NRB, the finance company has imposed a cash penalty of Rs 3,277,676,000 as per the existing arrangement for not maintaining the minimum mandatory reserve amount for the period from February 27 to April 23, 2018.

During this period, the CEO was alerted in accordance with clause (a) of Sub-section (2) of Section 100 of the Rastra Bank Act, 2058 as the loss management and classification of Guheshwori Merchant Banking and Finance Institution was found to be deficient in the reporting done with the Rastra Bank and the loan was regularized by issuing additional loans to recover the outstanding interest-installment of some loans and all these factors affected the loan loss arrangement and the financial statement of the institution was not realistic.

Similarly, it has been found that in violation of the provision in clause (b) of Sub-section (1) of Section 14 of the Banks and Financial Institutions Act, 2073, the institution did not appoint the post of director vacant before the Annual General Meeting.

It has been observed that the intention is to appoint a director by evading the current ANNUAL GENERAL meeting as it did not go through the election process for the appointment of vacant directors in the Annual General Meeting and the directors were appointed by the Board of Directors only after the completion of the Annual General Meeting. According to clause (a) of Sub-section (2) of Section 100 of the Rastra Bank Act, 2058, the alert has been issued through separate letters. Sajina Amatya and Dipesh Gorkhali were the directors of the organization.

Similarly, it has been found that the institution did not appoint the post of director before the Annual General Meeting in violation of the provision in clause (b) of Sub-section (1) of Section 14 of the Banks and Financial Institutions Act, 2073 BS.

It has been found that the intention was to appoint a director by evading the immediate annual general meeting as it did not go through the election process for the appointment of vacant directors in the annual general meeting and appointed the director from the board of directors only after the conclusion of the annual general meeting. As a result, the amendment made in the employees’ bye-laws regarding the gratuity of the employees was implemented without the approval of this bank as provided in Section 133 of the Bank and Financial Institutions Act, 2073. Reshma Shrestha was the director.

During his tenure as the chairman of the Board of Directors of Guheshwori, the amendment made in the employees’ bye-laws regarding the gratuity of the employees as per the provisions of Section 133 of the Bank and Financial Institutions Act, 2073 was implemented without the approval of this bank. Sarojini Shrestha and Rajesh Manandhar were the directors.