Nepal Rastra Bank has taken regulatory action against six Class “D” microfinance financial institutions for failing to meet certain regulatory requirements, according to a notice detailing actions taken during the fourth quarter of fiscal year 2082/83.
The central bank’s action includes measures against institutions that failed to maintain the required minimum capital adequacy ratio and those that did not maintain the mandatory cash balance. The actions have been taken under the Bank and Financial Institutions’ Early Corrective Action-Related Regulation, 2074.
Among the institutions facing action is Forward Microfinance Laghubitta Bittiya Sanstha Ltd., Sunsari, which maintained a minimum capital adequacy ratio of only 6.12 percent at the end of Ashar 2082. Since the ratio was below the regulatory requirement, the institution was subjected to early corrective action under the relevant provisions.
Similarly, Dhaulagiri Laghubitta Bittiya Sanstha Ltd., Baglung, maintained a capital adequacy ratio of 6.38 percent, which was also below the prescribed regulatory level. The central bank consequently initiated early corrective action against the institution.
Matribhumi Laghubitta Bittiya Sanstha Ltd., Budhanilkantha, Kathmandu, recorded a minimum capital adequacy ratio of 4.08 percent at the end of Ashar 2082. The institution was also brought under early corrective action for failing to meet the applicable regulatory benchmark.
Likewise, NIC Asia Laghubitta Laghubitta Bittiya Sanstha Ltd., Banepa, maintained a minimum capital adequacy ratio of 6.39 percent. Nepal Rastra Bank took corrective action against the institution after finding that the ratio did not meet the required standard.
The central bank also took action against Wean Nepal Laghubitta Bittiya Sanstha Ltd., Banepa, Kavrepalanchok, for failing to maintain the mandatory cash balance. According to the notice, the institution was fined Rs. 58.38 for its first violation in Chait 2082.
Another institution, Sanjiwani Laghubitta Bittiya Sanstha Ltd., Tulsipur, Dang, was fined for failing to maintain the required cash balance on multiple occasions. The institution was fined Rs. 713.88 for the first violation, Rs. 1067.40 for the second, Rs. 1412.91 for the third, and Rs. 1410.78 for the fourth violation, according to the notice.
The actions highlight Nepal Rastra Bank’s continued regulatory monitoring of microfinance institutions and its emphasis on maintaining adequate capital and liquidity. Such regulatory measures are intended to encourage institutions to comply with prudential requirements and strengthen their financial position.
Published by Nepal Rastra Bank on 2083-6-7
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