NDB depositors, shareholdesr seek NRB's assurance

A group of Nepal Development Bank (NDB) depositors today met Nepal Rastra Bank (NRB) governor Dipendra Bahadur Kshetry at his office and sought his assurance that their hard-earned money would be safe and that they would get it back. "NRB has taken the step to safeguard depositors' interest," said governor Kshetry, asking them not to worry.
Alongwith the depositors, share-holders are also worried as they have recently bought rights shares of the bank.
They are blaming NRB and Securities Board of Nepal (Sebon) for permitting the issue of the bank's rights shares. "Sebon cannot stop the rights shares issue," said Sebon director Niraj Giri. "If the board has any doubt, we consult the concerned regulatory body," he added. "The annual general meeting (AGM) of the company endorses the decision of rights shares issue and then comes to board for approval," he said adding that Sebon may seek clarifications, if it has any doubt but it has no authority to stop rights share issue as the company's AGM is the supreme body that decides.
However, the new regulation has given Sebon the power that the board of directors (BoD) of a company must first buy rights shares and only then throw these open to the public. "We brought the new regulation to protect the public from being cheated by companies' board members," Giri said. Any company's BoD has to inform the Sebon that they have already paid for the rights shares before they seek permission to float these rights issues among the public.
The NDB board members' intention to cheat the people was exposed after it was found that they had not applied for the rights shares. To increase capital, NDB issued rights shares. "But the board members themselves have not applied for rights shares. This shows an intent to cheat the public," said Giri.
NDB, the country's first development bank that started operations in 1998 has paid-up capital worth Rs Rs 320 million but its accumulated loss is more than double the paid-up capital -- Rs 678.6 million by the end of mid-March. Its non-performing loan is also at almost 30 per cent.
Nepal Stock Exchange (Nepse) has suspended the trading of NDB shares.

NMB to be warned
KATHMANDU: The board meeting of the Securities Board of Nepal (Sebon) today decided to send a warning letter to NMB Bank to be strict in handling primary issues. While managing the primary isue of Sunrise Bank, NMB Bank had lost 47 application forms after data entry. It was the issue manager for Sunrise Bank. However, it has recovered almost all the lost forms. Sunrise Bank's 37,50,000-unit shares worth Rs 375 million were floated from May 3 to 6 through NMB Bank.NMB Bank has admitted that the forms got lost due to carelessness. "The applications were lost after data entry," said the head of the merchant banking section of NMB Bank, acknowledging that it was a human error. NMB has assured investors that the lost applications are already listed in the data bank and that all these will be included in share allocation.