Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB) has kept chief executive officers and directors of 5 commercial banks under close surveillance.

So much so that the central bank is in favor of renewing the tenure of CEOs and directors of 5 commercial banks and electing new CEOs and directors. The decision will be made after the report of an independent audit of the top 10 commercial banks conducted by Bangladesh’s Hauladar Yunus & Co, a chartered accountant.

Currently, Global IME Bank, Nabil Bank, Nepal Investment Mega Bank, Kumari Bank, Laxmi Sunrise Bank, Himalayan Bank, Prabhu Bank, NIC Asia, NMB Bank and Rastriya Banijya Bank are examining the quality of their assets. Commercial banks are among the 10 banks in the list of CEOs that the NRB should not allow for a second term.

“Hauladar Yunus & Co, a chartered accountant, is conducting the audit independently,” an official of the NRB said, “Now the central bank is waiting for the same audit.” The findings of the report are yet to be seen. It is unlikely that the CEOs of 5 different banks will be repeated, looking at the current situation and the suggestions of the report. The new CEO is considered necessary to run the bank according to banking values. According to him, there is a situation of changing the CEO and director of 3 5 banks.

At present, Yunus & Co., a chartered accountant from Bangladesh, selected by the Nepal Rastra Bank, is collecting the details of the bank. The NRB selected the company on the basis of evaluation of technical and financial proposal as per Clause 38 (2) of the Public Procurement Act, 2063.

The company will examine the quality of assets of the banks, study the trend of 10 banks taking loans for repayment, group loan distribution, debt centralization, good and bad loans by the end of December 2025. It will also look at the loan size and default rate.

The government is going to conduct a full audit of 10 commercial banks as per the conditions set by the International Monetary Fund (IMF) while taking extended loans. On December 22, 2021, the government pledged to conduct an independent audit of the 10 largest banks while availing extended credit facility from the International Monetary Fund. Accordingly, the audit process is going to be started through a Bangladeshi company.

The IMF has been alleging that there is window tracing in Nepal’s banking sector and the actual report has not come out. The NRB will send the file to the Central Investigation Bureau (CIB) of Nepal Police for further investigation and legal action if serious errors are found in the report submitted by Hauladar.

There is also the question of how to look at the role of the central bank in the context of serious deficiencies in the study of the files of 10 banks. It is a complicated matter whether the problem has arisen in the bank while regulating the Nepal Rastra Bank effectively or because the regulation has not been done effectively.

Karnali Development Bank has been facing problems due to the lack of effective regulation by Nepal Rastra Bank. On December 26, 2081, the Nepal Rastra Bank declared Karnali as problematic. A case has been filed against 109 people involved in the scam of Karnali Development Bank claiming a loss of Rs 3.20 billion. Questions have also been raised as to what the NRB monitored when Karnali was in trouble.