NRB faces scrutiny after Nerude Mirmire insider trading probe assigned to accused board

KATHMANDU: Questions have emerged over regulatory accountability after the Nepal Rastra Bank (NRB) instructed the board of directors of Nerude Mirmire Laghubitta Bittiya Sanstha Limited to investigate allegations of insider trading involving its own directors, sparking criticism from shareholders and governance observers.

The controversy follows complaints lodged by several shareholders alleging that directors of the microfinance institution manipulated share prices through the dissemination of misleading information and insider dealings linked to the company’s stock trading.

Rather than launching an independent investigation, NRB’s Microfinance Institution Supervision Department directed the institution itself to conduct an internal inquiry and submit a report on the allegations.

According to shareholders familiar with the matter, former Mirmire Laghubitta director Sanjay Shrestha and other investors had filed complaints against former Sagarmatha Finance Limited Chief Executive Officer and current chairman of Akash Bhairav Securities Man Bahadur Rai, current Nerude Mirmire Chairman Rajkumar Rai, Tikaram Niraula, Managing Director of Vision Securities Rajkumar Timilsina, and former Nerude Mirmire Chairman Santosh Phuyal, among others, accusing them of engaging in insider trading practices.

Following the complaint, NRB sent a formal letter to the institution stating that a four-page complaint had been received against members of the board of directors and instructed the institution to conduct necessary investigations and submit a report.

The letter, signed by NRB Deputy Director Rameshwor Pokharel, directed the institution to investigate the complaint and furnish details to the central bank. NRB reportedly issued the instruction on Baisakh 29, 2083 BS, which corresponds to May 12, 2026, asking the board to oversee the inquiry.

The move has triggered strong objections from the complainants, who argue that assigning an investigation to the same body facing accusations raises serious concerns about conflict of interest and regulatory integrity.

“An issue that should have been independently investigated by the central bank has instead been handed over to the accused side itself,” a shareholder involved in the complaint said, questioning the regulator’s neutrality. “Allowing those under scrutiny to investigate themselves undermines confidence in the entire process.”

Shareholders further argued that insider trading is a serious financial market offense requiring immediate and impartial investigation. According to them, if NRB lacked jurisdictional capacity to conduct the inquiry directly, it could have coordinated with other relevant agencies instead of delegating the responsibility back to the institution.

After receiving NRB’s directive, Nerude Mirmire formed an investigation committee led by director Bhanu Dawadi. Sources said the committee includes Chief Executive Officer Keshav Kumar Poudel and Company Secretary Rajesh Shrestha as members.

However, complainants have also questioned the committee’s independence, alleging that some committee members are considered close to Chairman Rajkumar Rai and former Chairman Santosh Phuyal.

Meanwhile, the Securities Board of Nepal has separately sought clarification regarding complaints filed against Nerude Mirmire Microfinance. The board’s legal department has reportedly directed the institution to investigate the allegations and submit relevant information and supporting documents.

A letter signed by Assistant Director Ashok Kumar Bista has instructed the institution to provide details within seven days on actions taken regarding the complaint.

Responding to concerns, NRB spokesperson and Executive Director Guru Prasad Paudel said insider trading concerns are linked to institutional governance and remain an area of interest for both the central bank and the securities regulator.

“The issue of insider trading is also a concern of Nepal Rastra Bank from a corporate governance perspective. However, it primarily falls under the jurisdiction of SEBON,” Paudel said.

He added that if any institution is found to have violated governance standards, it could become subject to action by the central bank.