Nepal Development Bank (NDB) investigation officer T R Upadhyaya thinks that the bank can be revived if it settles its Non-Performing Assets (NPA).
"If NDB settles its NPA -- like Rs 110 million with Holyland School, Rs 90 million with Nepal Cooperatives Ltd and Rs 80 million with Gurkha Hydropower -- it can be revived," he said hinting that he might submit the report to Patan Appellate Court this week. The court will decide NDB's fate after it receives Upadhyaya's report -- whether to revive or liquidate it.
Impatient depositors of the Nepal's first development bank today tried to convince him of the possibilities of the revival of the bank. Around 4,000 depositors of troubled NDB are willing to assist the new investors by not withdrawing their accumulated sum -- around Rs 350 million -- for the next six months. "We want the bank to reopen at the earliest," said Nepal Bikash Bank Peedit Sangh president Kirti Madan Joshi. "Hence, we'd like to withdraw money in instalments. We are ready to withdraw only 50 per cent of our deposit to help the bank, if it reopens," he said adding that new investors should be given a chance.
"But the new investors' capital plans have to be convincing," said Upadhyaya, who is holding one-to-one consultations with prospective investors.
Meanwhile, depositors urged Upadhyaya indirectly to accept the proposal of Badri Bhattarai and Nabin Pun -- son of former chairman Uttam Pun -- and his group who have proposed to settle the NPA and Non-Banking Assets (NBA) before injecting Rs 240 million capital. Bhattarai -- who personally holds 10,000-unit of promoters shares of NDB -- plans to use the Rs 80 million that is deposited for rights shares to make a total of Rs 320 million. Along with Rs 280 NPA -- that they have planned to recover, and Rs 320 million -- the total will come to Rs 600 million, according to the capital plan of Bhattarai and his group.
Nimbus Group and its associates plan to inject Rs 320 million but want to buy out 'promoters' who have been held responsible for sullying NDB's reputation. Nimbus has offered depositors the choice to withdraw their deposit. It also plans to issue rights shares to increase capital to Rs 640 million by end of 2010.
However, not only depositors but also around 20,000 shareholders are clueless since the matter has gone into a legal loop. Patan Appellate Court appointed Upadhyaya as investigation officer on July 29 as per the Insolvency Act 2007.
Of late, depositors are getting lured by high interest rates and do not check the reliability of the banks' management and Board of Directors. They have learnt the hard way that reliability is the key and not just the lure of high interest.
NDB's case has also debunked the myth that banks can never fail. "In fact banks can fail, if the management and directors are not sincere," said a banker. "Depositors must be aware of the back ground of the management and Board of Directors of banks and financial institutions before depositing their hard-earned money," he said, urging banks and financial institutions to follow Nepal Rastra Bank's (NRB) directives. "Had NDB followed NRB's directives it would not have been in trouble today."