CIB nabs Shrestha over insider lending

Central Investigation Bureau (CIB) under Nepal Police arrested Dibya Kumar Shrestha for 'insider lending'.

Shrestha, who had borrowed Rs 446 million from crisis-ridden Crystal Finance Company against the banking norms, was arrested near Thamel in Kathmandu yesterday.

Shrestha’s wife Anju Devi and daughter Alpana are the promoters of the finance company. The Bank and Financial Institution Act (BAFIA) has barred promoters having more than one per cent stake in financial institution from taking loans for themselves and their family members.

Police have suspected that his wife is hiding in Kathmandu and the daughter has fled to Bangkok. “We are searching for both mother and daughter,” said DSP Umesh Raj Joshi.

According to a CIB, the company, after sanctioning the insider loans, did not even try to recover it putting the company into more troubles.
The central bank had last week declared the company crisis-ridden.

After the insider lending came to light, the central bank had asked the finance company to improve its financial health under prompt corrective action. The central bank had directed it to bring its non-performing assets (NPA) to five per cent and capital adequacy ratio to 11 per cent. But the finance company failed to improve its financial health.

The crisis-ridden Crystal Finance’s accumulative loss stood at Rs 23 million and capital adequacy ratio went negative by 30.4 per cent, after loan-loss provisioning and deducting the insider lending from the company’s core capital, according to the central bank’s directive.

Similarly, the finance company has also been failing to increase its paid-up capital but it has only Rs 70 million paid up capital.