Kathmandu- Nepal Rastra Bank (NRB) is finalizing preparations to declare Pokhara Finance a troubled institution, granting it a 15-day response window under Section 86(6) of the Nepal Rastra Bank Act, 2058.
Governor Maha Prasad Adhikari had initially proposed issuing a 35-day notice, citing deteriorating financial indicators. However, other board members opposed the longer timeframe, emphasizing the urgency of intervention to prevent further malpractice and the risk of institutional board members shirking their responsibilities. Consequently, the board decided on a 15-day notice, compelling the governor to comply, according to an NRB board member.
'When an institution is in financial distress, timely intervention is crucial to mitigate risks and prevent malpractice. The governor had proposed a 35-day notice, but the majority of board members opposed it, arguing it would exacerbate the risks. As a result, the governor agreed to issue a 15-day notice,' one of NRB the board member explained.
Once the notice is issued, NRB is prepared to declare Pokhara Finance a troubled institution.
Revised statistics for the month of Ashoj reveal a sharp decline in Pokhara Finance’s financial health. Non-performing loans (NPLs) surged from 14.44 percent to 41.07 percent, while the capital fund has turned negative by 8.57 percent (Rs 711.1 million). The institution’s worsening financial indicators have reached a critical stage, necessitating prompt corrective action.
Similarly, Janaki Finance and Narayani Development Bank are also under NRB’s scrutiny due to fragile financial conditions. However, since their capital funds remain positive, Governor Adhikari is reportedly hesitant to declare them troubled institutions during his tenure.
