Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: A Bangladeshi audit firm has begun reviewing the loan portfolios of Nepal’s ten largest commercial banks, fulfilling a key condition set by the International Monetary Fund (IMF) under the Extended Credit Facility (ECF). The review officially started on Sunday after months of delay and mounting pressure on Nepal Rastra Bank (NRB).
The IMF had made the independent audit of the country’s biggest lenders mandatory for Nepal to unlock remaining tranches of the ECF. Dissatisfied with NRB’s repeated postponements in appointing an auditor, the IMF had openly expressed concerns about the quality of loans issued by Nepali banks, particularly during the COVID-era refinancing program.
NRB had earlier selected global auditing giant KPMG for the task but later scrapped the deal citing disagreements over financial terms. Following a fresh tender process, Dhaka-based Hawladar Yunus & Company was chosen as the independent auditor.
According to NRB, the central bank has signed an agreement worth NPR 62.54 million (approximately USD 271,670) with the Bangladeshi firm, which must complete the review within five months. The company is tasked with assessing the credit quality, loan exposure, and potential risks across the selected banks.
The 10 banks chosen for the review—based on their highest lending volumes as of mid-July—include:
Global IME Bank (largest loan portfolio)
Nabil Bank
Nepal Investment Mega Bank
Kumari Bank
Rastriya Banijya Bank
Laxmi Sunrise Bank
Himalayan Bank
NIC Asia Bank
NMB Bank
Prabhu Bank
Sources said Global IME Bank, which tops the lending chart, is already undergoing the first phase of the audit. Other banks have also been notified of the review process.
For months, the IMF had flagged Nepal’s rising credit risk and mounting non-performing loans, warning that structural weaknesses in loan classification and reporting could undermine financial stability. The Fund has particularly questioned the sustainability of loans issued under NRB’s refinancing packages during the pandemic, citing concerns over repayment capacity and asset quality.
Bank executives have confirmed that Hawladar Yunus & Company has already begun initial assessments. The final report, expected within five months, will be submitted to NRB and subsequently shared with the IMF.
This independent loan portfolio review is not just a procedural exercise but a test of transparency for Nepal’s banking system. The findings will carry significant weight for both international lenders and investors monitoring Nepal’s financial health and its compliance with global banking standards.
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