Kuber, Himalaya finance declared crisis-ridden

The central bank has declared two finance companies — Himalaya Finance and Kuber Merchant and Finance —crisis-ridden after their financial status deteriorated due to negative capital adequacy ratio, and also to save the new depositors from being trapped.
They will now not be able to collect deposits and lend, except recover loans and repay depositors.
They were issued prompt corrective action earlier eight months ago giving them ample time to improve their financial health. However, Himalaya Finance failed to improve its deteriorating financial health, whereas Kuber Merchant and Finance could not make Nepal Rastra Bank satisfy with its explanation.

Both the Class C financial institutions have negative net worth and don’t have adequate liquidity. The central bank had been keeping them under its close surveillance since last eight months.

Himalaya Finance was found not even keeping records of its transactions. But eight months ago, its capital adequacy ratio (CAR) stood at 2.16 per cent less than the regulatory requirement.

The second quarterly report of 2011-12 of the Himalaya Finance revealed that it has a Rs 140 million paid-up capital but has Rs 520 million worth deposits and Rs 680 million worth credit. But it had incurred an operating loss of Rs 2.4 million till the second quarter of 2011-12 with heavy exposure in the real estate.

Likewise, Kuber Merchant and Finance has Rs 150 million paid-up capital with Rs 801 million deposits and Rs 893 million credits – as of the last fiscal year end – with heavy exposure to real estate.

One of the directors of Kuber Merchant and Finance Sudhir Basnet has been himself the lenders, who had managed to get loan from his own finance company pushing it to an edge.