NRB to seek clarification from Grand Bank - Nepal Rastra Bank (#NRB) will soon seek clarification from Grand Bank on why the banking sector regulator should not declare the class ‘A’ financial institution ‘problematic’. The decision to seek clarification from the bank was taken by NRB’s board meeting held today. “We took this decision as the institution failed to prop up its financial health. The management of NRB will soon communicate with the bank and seek answers,” a source, who took part in today’s meeting, told The Himalayan Times. If NRB deems the response provided by the bank unsatisfactory, it will declare Grand Bank ‘problematic’, making it the first commercial bank in years to get that status. Problematic financial institutions are generally given a period of around six months to implement reforms and shore up its finances. If they fail to do so within the deadline, NRB takes further action. The fragile financial condition of Grand Bank — which was highly exposed to the real estate market when property prices were at a peak — was exposed in August last year, when it published its balance sheet. It showed capital adequacy ratio (CAR) — which gauges a banking institution’s strength to absorb shocks and ability to extend loans — hovering around 4.07 per cent. This ratio was way below minimum regulatory requirement of 10 per cent for commercial banks like Grand. The bank’s CAR had taken a dip larg...
Posted on: Thu, 15 Jan 2015 06:28:00 +0000
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