Nepal Rastra Bank Takes Swift Corrective Action Against Half a Dozen Microfinance Institutions

Nepal Rastra Bank has swiftly taken corrective action against half a dozen microfinance institutions, including Arambha Chautari, Ganpati, Samudayik, Nerude, and CYCS, for failing to maintain the minimum capital fund ratio. The central bank has cautioned the chief executive officers of these microfinance institutions for incorrectly showing loan loss provisions as income, which violates regulations.

The bank also warned the board of directors of Dhaulagiri Microfinance for non-compliance with financial regulations in vehicle purchases and errors in employee reinstatement. Kathmandu, 15th Ashar — Nepal Rastra Bank has implemented swift corrective measures against six microfinance financial institutions. Those under scrutiny include Arambha Chautari, Ganpati, Samudayik, Nerude, and CYCS microfinance institutions.

According to the bank, Arambha Chautari maintained a minimum capital fund ratio of only 7.77 percent as of the end of Ashar 2082. Since this ratio falls below the regulatory requirement, the institution has been subjected to action under the Bank and Financial Institution (Swift Corrective Action) Regulations, 2074. Microfinance institutions are mandated to maintain an 8 percent capital fund.

Similarly, Ganpati Microfinance Financial Institution faced sanctions for failing to maintain the capital fund requirement. By the end of Ashoj 2082, the institution maintained a capital fund ratio of merely 6.06 percent, resulting in corrective action. Samudayik Microfinance Financial Institution was also penalized after maintaining only 6.12 percent capital fund ratio as of the end of Ashar 2082.