Central bank declares Nepal Share Market and Finance a troubled financial institution

Nepal Rastra Bank (NRB) has declared Nepal Share Market and Finance(NSMF) a 'troubled financial institution' after it failed to follow the central bank’s directives.
The central bank imposing prompt corrective action in May has also asked the class C financial institution to take corrective measures within the three months.
It has restricted the finance company — yet another example of bad corporate governance — to collect fresh deposits and float new loans, after investigations revealed that its former chairman Yogendra Shrestha had embezzled depositors´ money and siphoned off huge money from the company creating fake borrowers.
The central bank directed it numerous instructions to improve its financial health. The new directors and chief executive, who took over the management also made numerous attempts to pull the finance out of the trouble. But all their efforts failed to improve the financial health leave alone the capital structure.
The central bank’s investigation has revealed that the finance company’s chairman Shrestha had embezzled Rs 165 million deposit of Citizens Investment Trust (CIT), Rs 200 million of Rastriya Beema Sansthan (RBS), apart from the Janata Bank’s Rs 100 million and other banks and financial institutions’ huge deposit making it to a total of over Rs 2 billion.
Shrestha and his family own 40 per cent stake in the finance company giving him the key role to misappropriate deposits, though some of the company’s staff were also involved in the embezzlement.
Shrestha had also issued credit of around Rs 1.60 billion in the name of fake borrowers, according to the central bank’s investigation.