Roshan Kumar Neupane, the Chief Executive Officer (CEO) of NIC Asia Bank, has reportedly tendered his resignation following deteriorating financial indicators of the bank, according to various sources. While Neupane has recently submitted his resignation, the Board of Directors has yet to approve it, as per sources from the bank and Nepal Rastra Bank.
Appointed CEO in November 2018, Neupane’s tenure was extended in November 2022. Although his contract was set to last until November 2026, he is seeking to step down prematurely due to the bank's declining performance. Sources indicate that the Board is reluctant to accept his resignation immediately, fearing a negative signal as the bank faces issues stemming from aggressive business expansion during his leadership.
Under Neupane's tenure, the bank pursued aggressive business growth, which led to reckless lending practices and declining financial indicators.
As per the unaudited financial statement published by the bank, its net profit has dropped by 93.03% in the second quarter of the current fiscal year (FY 2024/25). By mid-January 2025, the bank reported a net profit of only Rs 151.7 million, a significant decline from Rs 1.9 billion in the same period of FY 2023/24.
The distributable profit is in negative, and the bank's non-performing loans (NPLs) have risen sharply. In the second quarter of the previous fiscal year, the NPL ratio was 1.19%, which has now surged to 4.61%.
The decline in financial indicators has also impacted investors. NIC Asia did not distribute dividends from its profits in FY 2023/24. Earlier, the bank was unable to distribute dividends for FYs 2020/21 and 2021/22 due to its failure to meet Nepal Rastra Bank's (NRB) primary capital requirements. However, in FY 2022/23, the bank distributed 29% bonus shares and 1.52% cash dividends, amounting to a total of 30.52% dividends.
The NRB has taken action against the CEO, board members, and related entities for violating regulatory norms. According to NRB, the bank was found offering interest rates higher than those published to directors, their family members, and associated institutions. It also retroactively modified the opening dates of fixed deposit accounts for such entities, necessitating the refund of interest and a commitment to prevent such practices in the future.
The NRB has issued warnings under Section 100, Subsection 2(a) of the Nepal Rastra Bank Act to CEO Roshan Kumar Neupane, Chairman Tulsi Ram Agrawal, and directors Trilok Chandra Agrawal and Ram Chandra Sanghai.
During its on-site inspections, NRB found the bank to be non-compliant with directives on loan classifications, capital adequacy ratio, interest rates, and institutional governance. The central bank has instructed NIC Asia to implement an improvement plan to address these deficiencies.
Additionally, NIC Asia was found to have reclassified loans from other sectors under the "residential loans" category last year, prompting further investigation by NRB. The bank also faced allegations of manipulating profits by extending microfinance loans, collecting service fees upon repayment, and inflating earnings artificially.
