Tuesday, June 19, 2012

Krishi Premura to take charge of Gurkha Development Bank

The troubled Gurkha Development Bank seems to have escaped liquidation.
"The class 'B' development bank will send the minutes of today's meeting that has decided to hand over its charge to majority stakeholder Krishi Premura Holding which has around 22 per cent share in the bank," said managing director of the bank Amod Domzone. However, according to the central bank rule, a shareholder can have only 15 per cent share in a financial institution.
Chairman of Krishi Premura Rakesh Adukiya will be the chairman of the bank, he said, adding that he will reconstitute the board, issue rights shares and find strategic partners to increase the paid-up capital, according to the central bank's diktat.
The promoters have to inject Rs 320 million to rescue Gurkha Development Bank that had been earlier asked by the central bank to submit its capital plan by June 14, but extended it by a week till today.
Nirmal Gurung, one of the three key promoters with six per cent stake also supported Adukiya along with the minority promoters. Another key promoter DB Bamjan — who has 14 per cent stake — is serving a jail term for banking fraud but he could also send a representative to the board.
The bank had called a meeting of the promoters today to decide who should lead the bank and to escape liquidation. "Adukiya will now submit a capital plan to the central bank," said Domzone, adding that the promoters will have 51 per cent share after the rights issue.
"Bamjan also agreed to allow Adukiya to run the bank," he said, adding that Gurkha Development Bank requires around Rs 1 billion to recover its financial health.
The central bank had declared Gurkha Development Bank a troubled financial institution on March 25, 2011 and frozen the assets of the promoters too.
After the deadlock lengthened, chief executive officer of the bank Krishna Kumar Bhattarai had resigned from his post last month.
The Nepal Rastra Bank (NRB) had asked Gurkha Development Bank to come up with a workable capital plan by mid-June, and the bank was exploring three options — issuing rights shares, one majority shareholder purchasing stake of other two promoters and a third party injecting capital.
Bhattarai was appointed chief executive of the troubled bank last year with a mandate to bring reforms in the bank after its top management and board members faced charges under the Banking Offense Act.

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