Gurkha Development Bank has called for interested investors to purchase shares from existing promoters.
The management team deployed by Nepal Rastra Bank (NRB) is publishing a notice inviting interested entities to buy the bank’s shares and inject capital tomorrow. The new investors will require to achieve the NRB prescribed capital adequacy and to minimise the dominance of the existing promoters.
The central bank had sent a three-member team under NRB deputy director Bisrut Thapa including deputy director Mukti Sapkota and assistant director Ashok Kumar Rai in early January to oversee the management of the troubled bank.
The team’s major work was to improve the bank’s financial health and to find a replacement for the existing shareholders that ran the bank into the current mess. The national level development bank ran into trouble after the misappropriation of funds by its directors and executives. The bank’s bad corporate governance, large scale insider lending among directors, and dispute among the directors got the bank declared troubled by NRB in March, 2011.
Three key promoters — DB Bamjam, Nirmal Gurung and Rakesh Adukiya — have been blamed for the trouble in the bank that was running well. Bamjam was the bank's chairman when he was found to be involved in fake lending and is serving a jail term for banking fraud.
The notice says that only those interested parties that have never been involved in any banking crime are eligible to apply within the next 35 days with their plan.
Since March 2011, various attempts made by the bank to revive its financial health was aborted mid-way — either due to disagreements between directors or due to disapproval of the regulator.The 'B' class financial institution still has a total of Rs 1.5 billion bad loans and is not allowed to collect deposits. The ailing development bank will go under liquidation if things do not work out once again.