Nepal Rastra Bank rules: banks cannot show unreceived interest as profit

Nepal Rastra Bank (NRB) has announced that banks and financial institutions can no longer record interest that has not yet been received as profit.

In a notice issued by the Bank and Financial Institution Regulation Department on Friday, NRB said that while auditing the first quarter of fiscal year 2082/83, banks cannot include interest that has not actually been received by the end of Ashoj as income.

Instead, the uncollected interest must be listed only as “interest receivable” and not as profit.

NRB also stated that this amount cannot be used for dividend distribution, bonuses, director allowances, or social responsibility funds. It must only be recorded under “retained earnings.”

All banks and financial institutions under categories A, B, C, and D are required to submit their first-quarter financial reports to NRB by Kartik 21.

The central bank has warned that any institution failing to follow these instructions or missing the submission deadline will face necessary action.

NRB’s directive aims to make financial reports more transparent and ensure that profits shown by banks truly reflect money that has been received.