Nepal Rastra Bank Restricts Karnali Development Bank from Accepting Deposits and Issuing Loans

Nepal Rastra Bank (NRB) has imposed restrictions on Karnali Development Bank, headquartered in Nepalgunj, from accepting new deposits and issuing loans due to its deteriorating financial health.

An inspection by NRB revealed significant issues, including the bank's failure to maintain the prescribed capital adequacy ratio and a non-performing loan (NPL) ratio reaching a staggering 40.85%. These alarming financial indicators prompted the central bank to take corrective action.

The official statement from NRB reads:
“Considering the institution's financial position as problematic and to safeguard the interests of depositors and the general public, Karnali Development Bank is prohibited from collecting additional deposits, opening new accounts, and extending further credit effective immediately.”

Despite these financial challenges, the bank's shares have witnessed significant activity in the stock market. The stock price has reached an all-time high of NPR 840 per share, with a 5.66% increase on Monday alone.

According to the bank's financial report for the first quarter of the current fiscal year, it reported a net loss of NPR 19.8 million over three months, reflecting its precarious financial standing.