Browsing by Author "Gyawali, Tilottama"

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    Impact of bank supervision on lending practices of Nepalese Commercial Banks
    (2024) Gyawali, Tilottama ; Pitri Raj Adhikari
    This study investigates the impact of regulatory supervision on the credit practices of commercial banks in Nepal, focusing specifically on loans, advances and provisions for loan losses. Using a detailed analysis of three important banks: Rastriya Banijya Bank (RBB), Nabil Bank and Global IME Bank (GBIME), the study examines key performance indicators, including total loans and advances, loan loss provision ratios, non performing loan, return on assets (ROA), return on capital (ROE) and inspection frequency of Nepal Rastra Bank (NRB). The research employs a conceptual model to explore the relationship between regulatory oversight and banking performance. The independent variables, ROA, ROE, are analyzed against the dependent variables that include return on loans and advances, credit deposit ratio, loan loss provision, nonperforming loan ratio, number of NRB inspection. The findings reveal that the regulatory supervision, in particular the inspections of the NRB, significantly influences the lending practices of the commercial banks. These inspections help manage bad loans and guarantee adequate provisions for credit losses, thus mitigating credit risk and improving profitability. The study concludes that there is a positive correlation between the supervision of the NRB and the financial health of the banks. The directives and regulatory policies issued by the NRB play a crucial role in shaping the credit strategies of commercial banks, ensuring that they comply with their social responsibilities and at the same time maintain profitability and liquidity. The implications of these findings suggest that the bank administration must prioritize the rigorous evaluation of the financial status of borrowers and their capacity to pay to minimize bad loans and safeguard the financial stability of the bank. The study underlines the importance of effective regulatory supervision to maintain the solidity of the banking sector and suggests that continuous monitoring and adaptable policy frameworks are essential to sustain banking performance in the long term. Keywords: bank supervision, loan and advances, ROA, ROE, Number of Inspection, Return on Loan and Advances, Non-performing loan, Loan loss provision