Samjhana Finance gets new suitors

Two parties have agreed to inject capital to rescue the troubled Samjhana Finance Company but the central bank needs to endorse the move.
"One party applied at the central bank on Friday and the other has applied today promising to inject capital,” Mod Tripathi, managing director of the troubled finance company said.
The central bank has on February 7 sought explanation with the finance company on why should it not be liquidate due to its bad financial health.
“We are submitting our explanation tomorrow,” he said.
The central bank has decided to send Samjhana Finance into liquidation -- after it get the explanation -- as it has mobilised deposits of Rs 180 million from the public but has a total liability of Rs 640 million.
After declaring it a troubled finance institution, the central bank has last year restricted it to mobilise deposits and float loans on the basis of its weak capital base and high non-performing asset.
The class-C finance company has an outstanding loan worth Rs 210 million and its non-banking assets stands at Rs 300 million. Banepa-headquartered finance company has two branches one each in Kathmandu and Lalitpur.
The central bank had started investigation after its depositors – whose could not get their deposits back– complained the central bank.
However, the deposits of the public are not at risk as the collaterals pledged against loans issued are under central bank’s possession.
The company has around 5,000 depositors, according to the central bank.
After repeated cases deposit risk of the financial institutions, the central bank has started deposit of Class-B development banks and Class-C finance companies up to Rs 200,000 insurance through Deposit and Credit Guarantee Corporation.
Had the law punished Uttam Pun and his team of the liquidated Nepal Development Bank (NDB) by putting them behind bars, others would not have been dared to risk the public deposit.