Karnali Development Bank Reduces Founder Shareholdings After Illegal Capital Confirmation; NRB Management Team Takes Action

The founder shareholdings of Karnali Development Bank have been significantly reduced following an investigation that concluded certain shareholders had maintained their shares illegally. The decision was announced on Tuesday through an official notice issued by the Nepal Rastra Bank (NRB)-appointed management team, which currently oversees the bank.

Nepal Rastra Bank had declared Karnali Development Bank a troubled financial institution on Poush 10, 2081, citing severe financial and operational weaknesses. Following the declaration, NRB formed a special management and operations team to take control of the bank, evaluate its financial condition, and lead restructuring efforts.

According to the management team’s assessment, the bank’s paid-up capital had eroded, and its liabilities were no longer fully covered by its assets. During the review, it was found that several key founder shareholders had illegally paid up capital that should have been legitimately settled, violating regulatory norms and financial laws.

In line with Nepal’s banking regulations and as part of the bank’s restructuring process, the management group decided to reduce the shareholding of the concerned founder shareholders to just 1 percent. This drastic reduction aims to correct irregularities, protect depositors, and restore the bank’s financial stability.

The restructuring team stated that reducing illegitimately maintained shares is necessary to bring transparency to the bank’s capital structure. Nepal Rastra Bank will continue close supervision as additional corrective measures are implemented to bring Karnali Development Bank back to a stable and compliant position.