The Central Investigation Bureau of Nepal Police today arrested former chairman of Nepal Development Bank, Amar Gurung, for misappropriating Rs 360.5 million.
He was arrested from Maharajgunj, where he had been hiding. Gurung (62) of Armola, Kaski, had been on the run since 2009.
CIB Chief DIG Upendra Kant Aryal said the central bank had found Gurung guilty of misusing loan and bank resources, sanctioning illegal loan, siphoning off deposit, and defrauding depositors and investors against Nepal Rastra Bank Act, Banking Offences and Punishment Act and ‘Fraud Chapter’ of Civil Code.
“Gurung had abused the authority and cheated depositors and investors of around Rs 360.5 million,” said DIG Aryal.
The investigating bureau said it had also launched a manhunt to nab Uttam Pun (50) of Kusunti, Lalitpur, for embezzling millions of rupees and deteriorating financial health of NDB. Pun, former executive chairman of the bank, is still at large. Gurung has been referred to Metropolitan Police Range, Hanumandhoka, to press banking offence charges against him.
On July 9, 2009, the central bank had moved Patan Appellate Court seeking liquidation of the troubled Nepal Development Bank. Following a court decision, the bank had gone to liquidation on December 18, 2009, becoming the first domestic bank to have been asked to terminate its business. Though it had a paid-up capital of Rs 320 million, losses were pegged at around Rs 670.87 million. It had total assets worth Rs 730.13 million, but the non-performing assets (NPA) stood at 55.09 per cent and capital adequacy ratio a whopping 48.31 per cent — almost five times more than the permissible limit.
The bank had Rs 720 million in deposits, of which more than two-thirds belongs to Employees Provident Fund (EPF) and the Nepali Army Welfare fund.
NDB — Nepal’s first development bank that started its operations in 1998 — had been ailing for many years. The former chairman Uttam Pun who had shares worth Rs 1.6 billion was asked to step down by the central bank and Gurung was appointed as the chairman.
The central bank had declared NDB an ailing institution on October 11, 2007. Over the years, NDB never followed the central bank’s regulatory obligations, instead frittered away depositors’ money and moved to court to stop central bank’s directives.
Uttam Pun — the then executive chairman and promoter of NDB — had repeatedly moved the Appellate Court, and got a reprieve from the judiciary even as the unsuspecting public continued to deposit in his institution. The bank had Rs 720 million in deposits of which more than two-thirds belongs to Employees Provident Fund (EPF) and Nepal Army Welfare fund.
EPF had Rs 331 million and Army Welfare Fund had Rs 180 million in fixed term deposits, which was later changed to call deposit as it had not been able to pay back the deposits even after the maturity of the fixed terms.