Nepal Rastra Bank has lifted the Prompt Corrective Action imposed on Pokhara Finance Limited. The central bank announced this decision through a public notice, stating that the financial condition of the finance company has improved significantly following the completion of its merger process with Samriddhi Finance Company Limited. The regulatory action was lifted in accordance with Regulation 3, Clause (c) of the Bylaws on Prompt Corrective Action of Banks and Financial Institutions, 2074.
Background of the Regulatory Action
The central bank had previously placed Pokhara Finance under supervisory action due to capital adequacy issues. Based on the company’s unaudited financial reports up to mid-Push 2080 and supervisory adjustments made during the off-site evaluation in the first quarter of the fiscal year 2081/82, its capital adequacy ratio had fallen way below the minimum requirement set by the central bank. Consequently, Nepal Rastra Bank initiated the Prompt Corrective Action against Pokhara Finance on Magh 23, 2081.
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Merger and Financial Recovery
To address the capital shortfall, Pokhara Finance entered into a merger agreement with Samriddhi Finance Company Limited. The merger proposal received its final regulatory approval from the central bank board on Baisakh 17, 2083. Following the merger, financial projections based on the unaudited financial reports of mid-Baisakh 2083 indicate a substantial recovery in the joint entity’s financial health.
The merged institution is projected to maintain a core capital of 6.06 percent and a total capital adequacy ratio of 10.80 percent. This improvement meets the regulatory thresholds required by the central bank.
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Lifting of the Directives
Based on these positive financial indicators, the board of Nepal Rastra Bank made a formal decision on Ashar 10, 2083, to lift the corrective measures. The removal of the Prompt Corrective Action will officially take effect from the date the joint integrated transactions of the merged entity commence.