Kathmandu . NICA Asia Bank is currently facing a significant crisis, with several branches on the verge of closure due to ongoing financial turmoil. According to branch networks, after sustaining continuous losses in major commercial banking, NICA Asia has reached a point where some branches are being forced to shut down.

With declining business, NICA Bank branches are gradually closing down. The bank had expanded its network according to the policy of having a branch or ATM within every 1-kilometer radius in Kathmandu Valley. However, operational challenges have now hindered this expansion plan.

The Nepal Rastra Bank had previously cautioned NICA Bank regarding serious financial irregularities in its operations and urged them to rectify these issues. However, despite the warning, NICA Bank continued its faulty practices, leading to regulatory scrutiny and eventual intervention by the central bank.

In the midst of these challenges, NICA Asia Bank’s irregularities in financial reporting have come to light. The bank’s abnormal increase in housing loans and unnatural growth in profit distribution have raised concerns among regulators and stakeholders.

As per the “Vasool-3” report published by the bank in Asar 2080, it had invested Rs. 54.98 billion in housing loans. However, within six months, this amount surged to Rs. 133 billion, indicating a significant increase in risky lending practices.

NICA Asia Bank’s aggressive lending in the housing sector, where the risk burden is capped at 60%, has raised eyebrows. In contrast, the risk burden for commercial real estate, shares, and debentures above Rs. 5 million is set at 125%. This imbalance in risk management has centralized the bank’s risks in the housing sector.

Moreover, during the six months from Asar to Poush, NICA Asia Bank saw a staggering increase of Rs. 79 billion in housing loans, reflecting the bank’s unsustainable lending practices.

Amid these revelations, Dev Kumar Dhakal, Chief of the Supervision Department at the Nepal Rastra Bank, confirmed ongoing investigations into the concerning developments. However, the central bank refrained from commenting further on the matter at this time.

Additionally, NICA Bank has requested permission to close more than 86 branches and expanded counters. Following this revelation, Durga Prasai publicly urged people to withdraw their funds from NICA Bank, resulting in a massive outflow of Rs. 12 to 14 billion in a single day.

With daily withdrawals reaching up to Rs. 14 billion, the bank is struggling to control the damage. Consequently, the bank has issued around five to seven statements daily to counter misleading news and discourage further panic withdrawals.

In an effort to restore confidence, NICA Asia Bank’s branding department head, Saroj Bhattarai, expressed willingness to address the current crisis and seek support from stakeholders. The bank has also initiated advertising campaigns to regain trust and assure the public of its stability.

Furthermore, NICA Bank, which previously refrained from providing information to media outlets, has now begun bargaining with communication channels, promising favorable content in exchange for positive coverage and financial support.

Previously accused of withholding information and attempting to silence negative publicity, NICA Asia Bank’s attempts to control the narrative have raised concerns about transparency and accountability in the banking sector.

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