Following thorough monitoring by its supervision department, NRB penalized private sector lender Prabhu Bank alongside state-owned entities Rastriya Banijya Bank and Agricultural Development Bank.

Ex-CEO Fined Rs 5 Lakh over Prabhu Bank Lapses

NRB cited severe governance failures and persistent regulatory non-compliance at Prabhu Bank. Investigations revealed that the bank was grossly negligent in classifying loans, failed to maintain sufficient loan loss provisions, and repeatedly submitted inaccurate financial reports to the central bank.

• Personal Liability: NRB imposed a Rs 5 lakh fine on Prabhu Bank’s former CEO, Ashok Sherchan, for altering core banking system data to obscure the bank’s actual financial state in reports submitted to NRB.

• Board Directed: The central bank issued a formal warning to Prabhu Bank's Board of Directors, requiring them to immediately execute a corrective action plan after failing to improve despite prior warnings.

Procedural Violations at State-Owned Banks

The central bank also cited Rastriya Banijya Bank and Agricultural Development Bank for failing to comply with account-freezing protocols:

• Rastriya Banijya Bank: Received a formal warning for delaying account freezes, violating the Bank Account Freeze and Release Bylaws, 2081 BS.

• Agricultural Development Bank: Warned for delaying action on account-freeze requests submitted by law enforcement authorities.

NRB instructed both public sector lenders to ensure these procedural errors are not repeated.

Central Bank Mandate

NRB's latest disciplinary actions signal an intensified focus on scrutinizing financial statements and loan quality. The measures highlight that top executive leadership will be held personally accountable for misconduct, while public sector institutions will face the same strict regulatory oversight as private banks.