Saturday, June 6, 2009

NDB shareholders to move CIAA

A group of share holders of the troubled-Nepal Development Bank (NDB) is moving the Commission for the Investigation of Abuse of Authority (CIAA) against the NDB board and the central bank.
"We are cheated by NDB board and the central bank both," said one of the shareholders, who is preparing to file a case at the anti-corruption body. "They should be jailed -- for cheating depositors and share-holders -- and forced to pay from their property," he added.
On Tuesday, Nepal Rastra Bank (NRB) has decided -- the first time -- to send the ailing financial institution into liquidation. The NRB has claimed that it tried hard to improve and revive the first development bank of the country for five long years but failed.
Some of the NDB staff are also consulting the lawers to move the CIAA against the bank's management. "We are meeting the bank's chairman Amar Gurung on Sunday," a staff at the bank said adding that they would decide after the meeting.
The 70 per cent share of the NDB is owned by the promoters -- like NRB, Beema Sansthan and many more -- while remaining 30 per cent shares are with public.
The central bank has seized the NDB's cash and securities from its head office at the Heritage Plaza and Pokhara office -- after freezing all the transactions.
The NRB has sought clarification from the NDB on why shouldn´t it be liquidated. After 15 days -- on June 17 -- if the answer of the bank is not satisfactory, the central bank will move the Patan Appellate Court asking permission to appoint liquadator.
The bank has a total deposit of Rs 720 million as at mid-March 2009. The institutional depositors like Employment Provident Fund and Nepal Army are going to lose their deposits. They had Rs 330 million and Rs 200 million deposits respectively as the fixed term deposits. But the NDB could not return Nepal Army's deposit even after the term matured. "The Nepal Army's deposit is under call deposit," the source said adding that after expiring the term the status of the deposit has been changed as the bank failed to pay back.
Despite repeated directives by the central bank to improve financial health, the NDB didnot pay attention rather moved the Patan Appellate Court twice and got ex-parte stay order overturning the NRB's decision.
The NRB has declared it 'a problematic bank' in 2007 and directed to reduce its negative capital fund, appoint professional CEO and improve internal governance. It has an accumulated loss of Rs 678.6 million by the end of mid-March.

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