Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Bangladesh-based audit firm Haolader Yunus & Co. will begin a full audit of 10 large commercial banks in Nepal from early September, following a formal agreement with Nepal Rastra Bank (NRB) this week. The move comes as part of conditions set by the International Monetary Fund (IMF) for Nepal to access its Extended Credit Facility.
According to NRB Executive Director Roshan Kumar Sigdel, the second round of the bank selection process—initiated after the first attempt failed—has concluded with Haolader being awarded the contract worth around NPR 43.5 million. The audit is aimed at assessing the true financial health of Nepal’s top banks, with a focus on asset quality and compliance with prudent banking practices.
Initially, the process was delayed after the selection of Haolader was challenged in Nepal’s Supreme Court. As a result, the planned audit start date in mid-year has now been pushed to September. NRB plans to conduct preliminary off-site inspections before Nepal’s major festivals, while on-site auditing will begin immediately afterward.
The audit will involve 22 auditors from Haolader, along with two NRB staff members per bank, working simultaneously across all 10 institutions. Banks with weaker asset quality and questionable lending practices will be given priority.
Background: The IMF has raised concerns over Nepal’s banking sector, particularly regarding “evergreening” of loans—where banks allegedly roll over or refinance bad loans to avoid recognizing them as non-performing. The Fund has also urged NRB to implement stricter capital adequacy and working capital loan guidelines. The audit is expected to provide a clearer picture of actual non-performing loans (NPLs) and test the resilience of the sector under global and domestic financial stress.
Once complete, the audit could lead to significant regulatory action. Banks found with hidden NPLs or weak risk management may face capital recapitalization requirements, restrictions on lending, or management overhauls. For the broader financial system, the results will either restore confidence if the sector is sound or trigger reforms to safeguard depositor funds and align Nepal with global banking standards. The process will also send a signal to international creditors and rating agencies about Nepal’s seriousness in improving financial transparency and governance.
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