KATHMANDU: Nepal Rastra Bank has appointed a Bangladeshi company to conduct an asset quality review (loan portfolio review) of Nepal’s ten largest commercial banks.

Dhaka-based Howladar Yunus & Company was selected as the technically qualified firm to carry out the examination, according to Nepal Rastra Bank’s announcement. Other shortlisted firms included companies from Sri Lanka and India.

The review is being conducted as part of Nepal’s commitment to the International Monetary Fund (IMF) under the Extended Credit Facility (ECF) program, which requires international auditors to assess the financial health of the country’s major banks.

The IMF has emphasized the urgent need to review loan portfolios due to increasing non-performing loans and capital shortfalls.

Previously, an Indian firm, KPMG Assurance and Consulting Services Pvt Ltd, was chosen to conduct the audit but was disqualified due to the rejection of its financial proposal, leading to the cancellation of the contract.

Nepal’s government and Nepal Rastra Bank had committed to auditing the ten largest banks by international auditors as a condition for receiving approximately $395 million in IMF extended credit, the fourth tranche of which Nepal has already received.

The IMF has also recommended amendments to Nepal Rastra Bank Act and prioritized external auditing to improve financial oversight.