Nepal Rastra Bank (NRB) has taken regulatory action against Himalayan Bank Limited after identifying violations during a risk-based integrated onsite inspection conducted in the third quarter of FY 2082/83.

According to NRB, the bank was found to have provided backdated interest concessions to a limited group of borrowers at a prescribed premium rate. The discounted amount was reportedly used to adjust outstanding interest and principal payments.

The central bank also found that loan restructuring and rescheduling were carried out by collecting only 10% of overdue interest beyond the stipulated timeframe. In addition, only the overdue principal portion of restructured loans was classified properly, while the remaining principal was kept under performing loan categories without adequate loan loss provisioning.

NRB further stated that some loans were not correctly classified based on overdue duration. It was also observed that repayment periods for certain borrowers were extended for long durations without proper justification, and “forced loans” overdue by more than 90 days were not classified as non-performing loans (NPLs), with insufficient provisioning maintained.

These practices were deemed to be in violation of the Unified Directive 2081. Acting under Section 100(2)(k) of the Nepal Rastra Bank Act, 2058, the central bank has issued a formal warning to the bank’s Board of Directors and Chief Executive Officer.

Additionally, NRB has obtained a commitment letter (covenant) from the bank’s board, requiring corrective measures to address the identified issues and ensure compliance with regulatory standards going forward.