The central bank has sent the troubled United Development Bank to liquidation and upgraded Pokhara-based Annapurna Finance to a class 'B' development bank.
The Bara-based development bank was already under the scanner of the central bank. On January 5, the central bank had decided to liquidate it after it failed to improve despite the central bank’s repeated prescriptions. The development bank was declared ‘troubled financial institution’ in March, 2011 after a central bank study revealed a sharp deterioration in its financial health, mainly due to heavy embezzlement of funds by its promoters.
Inspection by a central bank team had revealed that the district-level development bank established with a paid up capital of Rs 85 million, had a negative net worth of Rs 120 million. The central bank had then asked it to recoup the money that the promoters had embezzled and instructed them to inject additional capital to improve its financials within six months. But the development bank failed to follow the central bank’s directives leaving it with no option but to send the development bank to liquidation.
It is the third financial institution sent to liquidation in the country's banking history after Nepal Development Bank and Samjhana Finance.
According to the central bank's records, the development bank got into trouble after its executive chairman Rabindra Bahadur Singh siphoned off Rs 65 million of the total paid up capital for personal use. The inspection revealed that Singh had created fake loans, and lent to promoters flouting central bank rules.
The central bank had also asked Nepal Police to take action against Singh and director of the development bank Radha Krishna Amatya under the Banking (Offenses) Act. Currently, Singh and Amatya are behind bars in Birgunj.
Similarly, the central bank decided to upgrade Annapurna Finance to a development bank. The development bank will be named Kailash Bikas Bank, according to the management.
There were 73 listed finance companies at the share market but after the upgradation of Annapurna Finance, it will drop to 72 and one more development bank will be increased under the development banks sub group making a total of 64 from the current 63 listed development banks.
Annapurna Finance that has listed 2,620,800 units shares at a face value of Rs 100 per unit, according to Nepse, last saw its shares traded at Rs 217 per unit on April, 22, 2010.
Declare Dhukuti illegal
KATHMANDU: The central bank has asked the Finance Ministry to officially declare Dhukuti illegal as lots of people have become victims of the informal deposit scheme. Recently, a woman committed suicide inside a police station due to Dhukuti, making the central bank think over the informal deposit scheme that has spread in the valley hitting the formal banking channel. "Either the government has to regulate it or declare it illegal as it has become a chronic problem in society forcing people to even commit suicides," the central bank said.
Showing posts with label NDB. Show all posts
Showing posts with label NDB. Show all posts
Wednesday, March 28, 2012
Friday, November 18, 2011
CIB nabs former chairman of NDB Amar Gurung
The Central Investigation Bureau of Nepal Police today arrested former chairman of Nepal Development Bank, Amar Gurung, for misappropriating Rs 360.5 million.
He was arrested from Maharajgunj, where he had been hiding. Gurung (62) of Armola, Kaski, had been on the run since 2009.
CIB Chief DIG Upendra Kant Aryal said the central bank had found Gurung guilty of misusing loan and bank resources, sanctioning illegal loan, siphoning off deposit, and defrauding depositors and investors against Nepal Rastra Bank Act, Banking Offences and Punishment Act and ‘Fraud Chapter’ of Civil Code.
“Gurung had abused the authority and cheated depositors and investors of around Rs 360.5 million,” said DIG Aryal.
The investigating bureau said it had also launched a manhunt to nab Uttam Pun (50) of Kusunti, Lalitpur, for embezzling millions of rupees and deteriorating financial health of NDB. Pun, former executive chairman of the bank, is still at large. Gurung has been referred to Metropolitan Police Range, Hanumandhoka, to press banking offence charges against him.
On July 9, 2009, the central bank had moved Patan Appellate Court seeking liquidation of the troubled Nepal Development Bank. Following a court decision, the bank had gone to liquidation on December 18, 2009, becoming the first domestic bank to have been asked to terminate its business. Though it had a paid-up capital of Rs 320 million, losses were pegged at around Rs 670.87 million. It had total assets worth Rs 730.13 million, but the non-performing assets (NPA) stood at 55.09 per cent and capital adequacy ratio a whopping 48.31 per cent — almost five times more than the permissible limit.
The bank had Rs 720 million in deposits, of which more than two-thirds belongs to Employees Provident Fund (EPF) and the Nepali Army Welfare fund.
NDB — Nepal’s first development bank that started its operations in 1998 — had been ailing for many years. The former chairman Uttam Pun who had shares worth Rs 1.6 billion was asked to step down by the central bank and Gurung was appointed as the chairman.
The central bank had declared NDB an ailing institution on October 11, 2007. Over the years, NDB never followed the central bank’s regulatory obligations, instead frittered away depositors’ money and moved to court to stop central bank’s directives.
Uttam Pun — the then executive chairman and promoter of NDB — had repeatedly moved the Appellate Court, and got a reprieve from the judiciary even as the unsuspecting public continued to deposit in his institution. The bank had Rs 720 million in deposits of which more than two-thirds belongs to Employees Provident Fund (EPF) and Nepal Army Welfare fund.
EPF had Rs 331 million and Army Welfare Fund had Rs 180 million in fixed term deposits, which was later changed to call deposit as it had not been able to pay back the deposits even after the maturity of the fixed terms.
He was arrested from Maharajgunj, where he had been hiding. Gurung (62) of Armola, Kaski, had been on the run since 2009.
CIB Chief DIG Upendra Kant Aryal said the central bank had found Gurung guilty of misusing loan and bank resources, sanctioning illegal loan, siphoning off deposit, and defrauding depositors and investors against Nepal Rastra Bank Act, Banking Offences and Punishment Act and ‘Fraud Chapter’ of Civil Code.
“Gurung had abused the authority and cheated depositors and investors of around Rs 360.5 million,” said DIG Aryal.
The investigating bureau said it had also launched a manhunt to nab Uttam Pun (50) of Kusunti, Lalitpur, for embezzling millions of rupees and deteriorating financial health of NDB. Pun, former executive chairman of the bank, is still at large. Gurung has been referred to Metropolitan Police Range, Hanumandhoka, to press banking offence charges against him.
On July 9, 2009, the central bank had moved Patan Appellate Court seeking liquidation of the troubled Nepal Development Bank. Following a court decision, the bank had gone to liquidation on December 18, 2009, becoming the first domestic bank to have been asked to terminate its business. Though it had a paid-up capital of Rs 320 million, losses were pegged at around Rs 670.87 million. It had total assets worth Rs 730.13 million, but the non-performing assets (NPA) stood at 55.09 per cent and capital adequacy ratio a whopping 48.31 per cent — almost five times more than the permissible limit.
The bank had Rs 720 million in deposits, of which more than two-thirds belongs to Employees Provident Fund (EPF) and the Nepali Army Welfare fund.
NDB — Nepal’s first development bank that started its operations in 1998 — had been ailing for many years. The former chairman Uttam Pun who had shares worth Rs 1.6 billion was asked to step down by the central bank and Gurung was appointed as the chairman.
The central bank had declared NDB an ailing institution on October 11, 2007. Over the years, NDB never followed the central bank’s regulatory obligations, instead frittered away depositors’ money and moved to court to stop central bank’s directives.
Uttam Pun — the then executive chairman and promoter of NDB — had repeatedly moved the Appellate Court, and got a reprieve from the judiciary even as the unsuspecting public continued to deposit in his institution. The bank had Rs 720 million in deposits of which more than two-thirds belongs to Employees Provident Fund (EPF) and Nepal Army Welfare fund.
EPF had Rs 331 million and Army Welfare Fund had Rs 180 million in fixed term deposits, which was later changed to call deposit as it had not been able to pay back the deposits even after the maturity of the fixed terms.
Sunday, February 27, 2011
Samjhana Finance gets new suitors
Two parties have agreed to inject capital to rescue the troubled Samjhana Finance Company but the central bank needs to endorse the move.
"One party applied at the central bank on Friday and the other has applied today promising to inject capital,” Mod Tripathi, managing director of the troubled finance company said.
The central bank has on February 7 sought explanation with the finance company on why should it not be liquidate due to its bad financial health.
“We are submitting our explanation tomorrow,” he said.
The central bank has decided to send Samjhana Finance into liquidation -- after it get the explanation -- as it has mobilised deposits of Rs 180 million from the public but has a total liability of Rs 640 million.
After declaring it a troubled finance institution, the central bank has last year restricted it to mobilise deposits and float loans on the basis of its weak capital base and high non-performing asset.
The class-C finance company has an outstanding loan worth Rs 210 million and its non-banking assets stands at Rs 300 million. Banepa-headquartered finance company has two branches one each in Kathmandu and Lalitpur.
The central bank had started investigation after its depositors – whose could not get their deposits back– complained the central bank.
However, the deposits of the public are not at risk as the collaterals pledged against loans issued are under central bank’s possession.
The company has around 5,000 depositors, according to the central bank.
After repeated cases deposit risk of the financial institutions, the central bank has started deposit of Class-B development banks and Class-C finance companies up to Rs 200,000 insurance through Deposit and Credit Guarantee Corporation.
Had the law punished Uttam Pun and his team of the liquidated Nepal Development Bank (NDB) by putting them behind bars, others would not have been dared to risk the public deposit.
"One party applied at the central bank on Friday and the other has applied today promising to inject capital,” Mod Tripathi, managing director of the troubled finance company said.
The central bank has on February 7 sought explanation with the finance company on why should it not be liquidate due to its bad financial health.
“We are submitting our explanation tomorrow,” he said.
The central bank has decided to send Samjhana Finance into liquidation -- after it get the explanation -- as it has mobilised deposits of Rs 180 million from the public but has a total liability of Rs 640 million.
After declaring it a troubled finance institution, the central bank has last year restricted it to mobilise deposits and float loans on the basis of its weak capital base and high non-performing asset.
The class-C finance company has an outstanding loan worth Rs 210 million and its non-banking assets stands at Rs 300 million. Banepa-headquartered finance company has two branches one each in Kathmandu and Lalitpur.
The central bank had started investigation after its depositors – whose could not get their deposits back– complained the central bank.
However, the deposits of the public are not at risk as the collaterals pledged against loans issued are under central bank’s possession.
The company has around 5,000 depositors, according to the central bank.
After repeated cases deposit risk of the financial institutions, the central bank has started deposit of Class-B development banks and Class-C finance companies up to Rs 200,000 insurance through Deposit and Credit Guarantee Corporation.
Had the law punished Uttam Pun and his team of the liquidated Nepal Development Bank (NDB) by putting them behind bars, others would not have been dared to risk the public deposit.
Saturday, August 28, 2010
DCGC may have to wait to start deposit gurantee
Deposit and Credit Guarantee Corporation (DCGC) may have to wait before it starts deposit guarantee scheme.
In the Monetary Policy for 2010-11, the central bank has made it mandatory for class-D micro finance institutions to guarantee deposits up to Rs 200,000. But class-D micro finance institutions were not allowed to collect deposit from the public except from their members till July 16.
The central bank allowed them to collect deposit from public from July 17. From the same date, DCGC has also started the deposit guarantee scheme for the deposits of up to Rs 200,000 of these institutions.
According to the central bank, only those class-D institutions can collect deposit from the public which have been posting profits for last three consecutive years.
Some of the institutions, which have fulfilled the central bank's criterion, have applied for the approval from the central bank to collect deposit from the public claiming that they have fulfilled the criterion fixed by the central bank to collect deposit from the public.
"Once they get approval from the central bank, they come to us for the deposit guarantee," said Jagdish Chalise, deputy general manager at DCGC that is planning to guarantee the deposits to safeguard the small depositors. "DCGC is fully prepared to entertain them."
The fiasco of Nepal Development Bank (NDB) that has been sent to liquidation by the Patan Appellet Court has compelled the central bank to guarantee the small deposits to prevent such incidents, where small depositors could lose their hard-earned savings.
Though, almost all the depositors of the bank got their deposit back, NDB is the first bank in the history of Nepal to be sent to liquidation after its financial health deteriorated and was beyond revival.
Tuesday, September 22, 2009
Higher denomination notes in short supply
ATMs closed, banks’ ceiling on withdrawal ahead of Dashain
The Nepal Rastra Bank (NRB) is facing a tough time ahead of Dashain. There is an acute crisis of currency notes of higher denomination.
Krishna Bahadur Manandhar, deputy governor, NRB, however, failed to allay revellers’ apprehension. “A shipment, carrying Rs 12 billion, is only expected on October 6. It will help tide over the scarcity,” he said. But that makes little sense for the revellers. Dashain will be over on October 3. A team of Nepal Bankers’ Association (NBA), too, lodged a complaint with the NRB about the looming crisis.
In a departure from the norm, a few desperate bankers were compelled to accept Indian Currency (IC) to meet the growing customers’ demand. But a peeved banker pointed out the legal constraints of paying the customers in IC. In the run up to the festive season, a bank requires around Rs 1 billion in cash daily to pay the customers.However, Manandhar explained the logistical problem that led to the crisis.
“We’ve been expecting the consignment from France earlier. But it got delayed due to unavoidable circumstances. The shortage stands at Rs 4,800 million,” he explained. As the crisis deepened, some banks were forced to shutdown their ATMs from this evening.
A few banks have put a cap on withdrawal as well. A depositor cannot withdraw more than Rs 1 lakh. Agriculture Development Bank Nepal has instructed its branches not to pay more than Rs 25,000, sending the customers into a tizzy.
“Though the central bank gave us Rs 10 million today, the demand is five fold,” said a banker.Uma Kant Thapaliya, president, NRB Employee's Association (Thapathali), said that there had also been an increased demand for lower denominations
.“This year, we’re not giving more than Rs 4,000 in lower denominations to an individual. This is half of the usual amount during the festive season,” he said.
He took a dig at the NRB for mismanagement, alleging it has been able to fulfill only 10 per cent of the demand. Thapaliya said that the crisis could have been averted had a proper planning was in place around six months ago.
NDB depositors withdraw cash
KATHMANDU: Around 60 depositors of the Nepal Development Bank (NDB) on Tuesday withdrew Rs 4.84 million — 50 per cent of their deposit. The withdrawal process took place between 3 and 5pm. “It’ll continue for the next two days," said Kirti Madan Joshi, president, Nepal Bikas Bank Pidith Sangh. On Friday, the Patan Appellate Court had directed the Nepal Rastra Bank (NRB) to release funds for the cash-strapped depositors. Subsequently, the central bank released Rs 27.9 million on Sunday. The court has ordered the NRB to let the depositors withdraw 50 per cent of their sum but not exceeding Rs 2 lakh.
The Nepal Rastra Bank (NRB) is facing a tough time ahead of Dashain. There is an acute crisis of currency notes of higher denomination.
Krishna Bahadur Manandhar, deputy governor, NRB, however, failed to allay revellers’ apprehension. “A shipment, carrying Rs 12 billion, is only expected on October 6. It will help tide over the scarcity,” he said. But that makes little sense for the revellers. Dashain will be over on October 3. A team of Nepal Bankers’ Association (NBA), too, lodged a complaint with the NRB about the looming crisis.
In a departure from the norm, a few desperate bankers were compelled to accept Indian Currency (IC) to meet the growing customers’ demand. But a peeved banker pointed out the legal constraints of paying the customers in IC. In the run up to the festive season, a bank requires around Rs 1 billion in cash daily to pay the customers.However, Manandhar explained the logistical problem that led to the crisis.
“We’ve been expecting the consignment from France earlier. But it got delayed due to unavoidable circumstances. The shortage stands at Rs 4,800 million,” he explained. As the crisis deepened, some banks were forced to shutdown their ATMs from this evening.
A few banks have put a cap on withdrawal as well. A depositor cannot withdraw more than Rs 1 lakh. Agriculture Development Bank Nepal has instructed its branches not to pay more than Rs 25,000, sending the customers into a tizzy.
“Though the central bank gave us Rs 10 million today, the demand is five fold,” said a banker.Uma Kant Thapaliya, president, NRB Employee's Association (Thapathali), said that there had also been an increased demand for lower denominations
.“This year, we’re not giving more than Rs 4,000 in lower denominations to an individual. This is half of the usual amount during the festive season,” he said.
He took a dig at the NRB for mismanagement, alleging it has been able to fulfill only 10 per cent of the demand. Thapaliya said that the crisis could have been averted had a proper planning was in place around six months ago.
NDB depositors withdraw cash
KATHMANDU: Around 60 depositors of the Nepal Development Bank (NDB) on Tuesday withdrew Rs 4.84 million — 50 per cent of their deposit. The withdrawal process took place between 3 and 5pm. “It’ll continue for the next two days," said Kirti Madan Joshi, president, Nepal Bikas Bank Pidith Sangh. On Friday, the Patan Appellate Court had directed the Nepal Rastra Bank (NRB) to release funds for the cash-strapped depositors. Subsequently, the central bank released Rs 27.9 million on Sunday. The court has ordered the NRB to let the depositors withdraw 50 per cent of their sum but not exceeding Rs 2 lakh.
Sunday, September 20, 2009
NRB releases Rs 27.9 million for troubled-NDB depositors
Nepal Rastra Bank (NRB) on Sunday decided to release Rs 27.9 million for the depositors of Nepal Development Bank (NDB). On Friday, the Patan Appellate Court directed the NRB to let the depositors withdraw a minimum amount in view of the festive season.
The court ordered the NRB to let the customers withdraw 50 per cent of their deposits, if the deposit is up to Rs 1 lakh. While, the maximum amount that be withdrawn is Rs 2 lakh, which ought to be at least 50 per cent of the deposit. Depositors can withdraw their sum from Tuesday.
The court has directed the NRB as suggested by Investigation Officer T R Upadhyaya, who submitted his report on Wednesday.
Apart from Dashain limited-withdrawal, Upadhayay has also recommended the revival of NDB as the Badri Bhattarai-Nabin Pun group has given bank guarantees equivalent to Rs 340 million -- Rs 240 million and Rs 100 million each. He has also argued that the liquidation of the NDB might hit the economy and encourage capital flight.
The court has also directed the central bank to release the NDB employees' salaries and their Dashain bonus. There are around 30 employees including those in NDB's Pokhara branch office and the head office at Kamaladi of Kathmandu.
Based on the recommendations by Upadhyaya, the court will decide whether to revive the bank or send it into liquidation after Dashain. The recommendation has said that in case of revival, the institutional depositors like Nepal Army and Employment Provident Fund will get their money back in three years.
The court ordered the NRB to let the customers withdraw 50 per cent of their deposits, if the deposit is up to Rs 1 lakh. While, the maximum amount that be withdrawn is Rs 2 lakh, which ought to be at least 50 per cent of the deposit. Depositors can withdraw their sum from Tuesday.
The court has directed the NRB as suggested by Investigation Officer T R Upadhyaya, who submitted his report on Wednesday.
Apart from Dashain limited-withdrawal, Upadhayay has also recommended the revival of NDB as the Badri Bhattarai-Nabin Pun group has given bank guarantees equivalent to Rs 340 million -- Rs 240 million and Rs 100 million each. He has also argued that the liquidation of the NDB might hit the economy and encourage capital flight.
The court has also directed the central bank to release the NDB employees' salaries and their Dashain bonus. There are around 30 employees including those in NDB's Pokhara branch office and the head office at Kamaladi of Kathmandu.
Based on the recommendations by Upadhyaya, the court will decide whether to revive the bank or send it into liquidation after Dashain. The recommendation has said that in case of revival, the institutional depositors like Nepal Army and Employment Provident Fund will get their money back in three years.
Saturday, September 19, 2009
Relief for strapped NDB depositors
Troubled Nepal Development Bank's (NDB) depositors might be able to celebrate Dashain with an easy mind as Patan Appellate Court yesterday directed Nepal Rastra Bank (NRB) to let them withdraw a minimum amount from their deposits.
The court has asked NRB to let worried depositors withdraw Rs 50,000 -- 50 per cent of their deposit -- if their deposit is Rs 1,00,000. "In case of more than Rs 1,00,000 deposit, they can still withdraw 50 per cent but not above Rs 2,00,000 deposit," said Nepal Bikash Bank Peedit Sangh president Kirti Madan Joshi.
"The letter wil reach NRB on Sunday and it will decide when to let us withdraw our deposits," an elated Joshi said adding that the NRB governor might decide their fate on Sunday. "If NRB permits us to withdraw, depositors with savings accounts and fixed -- whose account has already matured -- can withdraw according to the court directive," he added.
The court has heard the case after Investigation Officer T R Upadhyaya submitted his report on Wednesday. Upadhayay has recommended the revival of NDB as the Badri Bhattarai-Nabin Pun group has given bank guarantees equivalent to Rs 340 million -- Rs 240 million and Rs 100 million each. He has also argued that the liquidation of the NDB might hit the economy and encourage capital flight.
Though he has asked the court to clarify the definition of small depositors the court is silent on it and in turn has asked NRB to make arrangements for the withdrawal of deposits before Dashain.
The court has also asked the central bank to release the NDB employees' salaries and their Dashain bonus. There are around 30 employees including those in NDB's Pokhara branch office and the head office at Kamaladi of Kathmandu.
Based on the recommendations by Upadhyaya, the court will decide whether to revive the bank or send it into liquidation after Dashain. The recommendation has said that in case of revival, the institutional depositors like Nepal Army and Employment Provident Fund will get their money back in three years.
According to Upadhayay's recommendation, the settlement of Non-Performing Assets (NPA) and Non-Banking Assets (NBA) with extra capital injection can revive the bank. "The bank can be revived with internal resources (Rs 274.64 million) and Rs 320 million capital injection from the Bhattarai-Pun Group," he said.
Bhattarai -- the current promoter -- has given a Rs 240 million bank guarantee through Kumari Bank. Pun -- the son of 'controversial' former NDB chairman Uttam Pun -- has given a Rs 100 million bank guarantee through Kist Bank.
However, NDB has also to settle its NPA -- Rs 110 million with Holyland School, Rs 90 million with Nepal Cooperatives Ltd and Rs 80 million with Gurkha Hydropower for its revival.
The first development bank of Nepal has 19,865 shareholders and around 4,000 depositors. Patan Appellate Court appointed Upadhyaya as investigation officer on July 29 as per the Insolvency Act 2007. This is the first of its kind of case in the financial history of Nepal in which NRB sought the court's approval to sent a bank into liquidation.
The court has asked NRB to let worried depositors withdraw Rs 50,000 -- 50 per cent of their deposit -- if their deposit is Rs 1,00,000. "In case of more than Rs 1,00,000 deposit, they can still withdraw 50 per cent but not above Rs 2,00,000 deposit," said Nepal Bikash Bank Peedit Sangh president Kirti Madan Joshi.
"The letter wil reach NRB on Sunday and it will decide when to let us withdraw our deposits," an elated Joshi said adding that the NRB governor might decide their fate on Sunday. "If NRB permits us to withdraw, depositors with savings accounts and fixed -- whose account has already matured -- can withdraw according to the court directive," he added.
The court has heard the case after Investigation Officer T R Upadhyaya submitted his report on Wednesday. Upadhayay has recommended the revival of NDB as the Badri Bhattarai-Nabin Pun group has given bank guarantees equivalent to Rs 340 million -- Rs 240 million and Rs 100 million each. He has also argued that the liquidation of the NDB might hit the economy and encourage capital flight.
Though he has asked the court to clarify the definition of small depositors the court is silent on it and in turn has asked NRB to make arrangements for the withdrawal of deposits before Dashain.
The court has also asked the central bank to release the NDB employees' salaries and their Dashain bonus. There are around 30 employees including those in NDB's Pokhara branch office and the head office at Kamaladi of Kathmandu.
Based on the recommendations by Upadhyaya, the court will decide whether to revive the bank or send it into liquidation after Dashain. The recommendation has said that in case of revival, the institutional depositors like Nepal Army and Employment Provident Fund will get their money back in three years.
According to Upadhayay's recommendation, the settlement of Non-Performing Assets (NPA) and Non-Banking Assets (NBA) with extra capital injection can revive the bank. "The bank can be revived with internal resources (Rs 274.64 million) and Rs 320 million capital injection from the Bhattarai-Pun Group," he said.
Bhattarai -- the current promoter -- has given a Rs 240 million bank guarantee through Kumari Bank. Pun -- the son of 'controversial' former NDB chairman Uttam Pun -- has given a Rs 100 million bank guarantee through Kist Bank.
However, NDB has also to settle its NPA -- Rs 110 million with Holyland School, Rs 90 million with Nepal Cooperatives Ltd and Rs 80 million with Gurkha Hydropower for its revival.
The first development bank of Nepal has 19,865 shareholders and around 4,000 depositors. Patan Appellate Court appointed Upadhyaya as investigation officer on July 29 as per the Insolvency Act 2007. This is the first of its kind of case in the financial history of Nepal in which NRB sought the court's approval to sent a bank into liquidation.
Wednesday, September 16, 2009
Upadhyaya recommends NDB's revival
Investigation officer T R Upadhyaya has suggested the revival of troubled Nepal Development Bank (NDB). He has recommended to Patan Appellate Court that the bank has chances of revival as the Badri Bhattarai-Nabin Pun Group has given bank guarantees equivalent to Rs 340 million -- Rs 240 million and Rs 100 million each.
However, he has asked the court to clarify who the small depositors are and how much should they get. The Court had earlier instructed him to pay them first. Tomorrow, the court will define the small depositors and the amount they should get, and it will also order that the salaries of the employees be paid as they have not got their salaries. The employees had urged Investigation Officer Upadhyaya to get them their salaries before Dashain. Upadhyaya has urged the Court for payment of the employees salaries. There are around 30 employees including those in NDB's Pokhara branch office and head office in Kamaladi of Kathmandu.
However, based on the recommendations of Upadhyaya the Court will decide either to revive the bank or send it into liquidation after Dashain.
The recommendation has clearly stated that the bank, even if revived, cannot pay institutional depositors like Nepal Army and Employment Provident Fund. "If the bank is revived and runs according to the plan of the Bhattarai-Pun group, these institutions could get their deposits after three years," the recommendation said. It said that the settlement of Non-Performing Assets (NPA) and Non-Banking Assets (NBA) with capital injection will help improve the financial health of the bank as its Capital Adequacy Ration (CAR) will come to 11 per cent. In his report, Upadhyaya has recommended that the bank can be revived with internal resources (Rs 274.64 million) and Rs 320 million capital injection from the Bhattarai-Pun Group.
Bhattarai -- the current promoter -- has given a Rs 240 million bank guarantee through Kumari Bank. Pun -- son of 'controversial' former NDB chairman Uttam Pun -- has given Rs 100 million bank guarantee through Kist Bank.
If NDB settles its NPA -- Rs 110 million with Holyland School, Rs 90 million with Nepal Cooperatives Ltd and Rs 80 million with Gurkha Hydropower -- it can be revived, Upadhyaya has recommended in his report to Patan Appellate Court this week.Bhattarai-Pun Group's claim of settling the NPA and NBA before injecting Rs 340 million capital has been accepted by the investigation officer.
Bhattarai -- who personally holds 10,000-unit of promoters shares of NDB -- can also add Rs 80 million that is deposited for rights shares by the share holders. But Nepal Rastra Bank has frozen the money.Neither all the promoters nor all the shareholders bought the rights shares. According to the new Securities Board of Nepal (Sebon) rule, the promoters have to buy the rights shares before floating it to ordinary shareholders.The first development bank of Nepal has 19,865 shareholders and around 4,000 depositors. Patan Appellate Court appointed Upadhyaya as investigation officer on July 29 as per the Insolvency Act 2007. This is not only the first of its kind of case in the financial history of Nepal but also the appointed investigation officer has not himself got his fee though his payment comes as the first priority. The Court will decide the fee of the investigation officer.
However, he has asked the court to clarify who the small depositors are and how much should they get. The Court had earlier instructed him to pay them first. Tomorrow, the court will define the small depositors and the amount they should get, and it will also order that the salaries of the employees be paid as they have not got their salaries. The employees had urged Investigation Officer Upadhyaya to get them their salaries before Dashain. Upadhyaya has urged the Court for payment of the employees salaries. There are around 30 employees including those in NDB's Pokhara branch office and head office in Kamaladi of Kathmandu.
However, based on the recommendations of Upadhyaya the Court will decide either to revive the bank or send it into liquidation after Dashain.
The recommendation has clearly stated that the bank, even if revived, cannot pay institutional depositors like Nepal Army and Employment Provident Fund. "If the bank is revived and runs according to the plan of the Bhattarai-Pun group, these institutions could get their deposits after three years," the recommendation said. It said that the settlement of Non-Performing Assets (NPA) and Non-Banking Assets (NBA) with capital injection will help improve the financial health of the bank as its Capital Adequacy Ration (CAR) will come to 11 per cent. In his report, Upadhyaya has recommended that the bank can be revived with internal resources (Rs 274.64 million) and Rs 320 million capital injection from the Bhattarai-Pun Group.
Bhattarai -- the current promoter -- has given a Rs 240 million bank guarantee through Kumari Bank. Pun -- son of 'controversial' former NDB chairman Uttam Pun -- has given Rs 100 million bank guarantee through Kist Bank.
If NDB settles its NPA -- Rs 110 million with Holyland School, Rs 90 million with Nepal Cooperatives Ltd and Rs 80 million with Gurkha Hydropower -- it can be revived, Upadhyaya has recommended in his report to Patan Appellate Court this week.Bhattarai-Pun Group's claim of settling the NPA and NBA before injecting Rs 340 million capital has been accepted by the investigation officer.
Bhattarai -- who personally holds 10,000-unit of promoters shares of NDB -- can also add Rs 80 million that is deposited for rights shares by the share holders. But Nepal Rastra Bank has frozen the money.Neither all the promoters nor all the shareholders bought the rights shares. According to the new Securities Board of Nepal (Sebon) rule, the promoters have to buy the rights shares before floating it to ordinary shareholders.The first development bank of Nepal has 19,865 shareholders and around 4,000 depositors. Patan Appellate Court appointed Upadhyaya as investigation officer on July 29 as per the Insolvency Act 2007. This is not only the first of its kind of case in the financial history of Nepal but also the appointed investigation officer has not himself got his fee though his payment comes as the first priority. The Court will decide the fee of the investigation officer.
Sunday, September 13, 2009
Development banks want bigger pie
Development banks want a bigger role in the financial market.
"The central bank should ensure our representation in Credit Information Bureau (CIB)," said Development Bankers Association president and CEO of Malika Bikas Bank Jhapat Bohara, adding that Development banks also want to be the part of Central Depository Company, Banking Training Institute and Clearing House.
The Central Depository Company that is being established for the modernisation of the domestic capital market will have 50 per cent share of Nepse, 10 per cent share of CIB, 15 per cent of CIT and 25 percent of a group of six commercial banks -- Standard Chartered Bank, Nabil Bank, Nepal SBI Bank, Bank of Kathmandu, Nepal Investment Bank and NIC Bank -- as promoters. Bohara urged the Nepal Bankers Association (NBA) to give development banks also a chance to be part of it.
NBA -- along with Nepal Rastra Bank (NRB) and other financial institutions -- has established Nepal Clearing House Ltd that will commence Automatic Check Truncation and Clearing Systems to be evolved into a nation-wide payments system. It has 60 per cent share of NBA, 15 per cent of SCT, 10 per cent share of NRB and the remaining share is planned to be distributed between development banks and finance compnaies.
NBA -- with the help of NRB and Rural Microfinace Development Centre (RMDC) and other financial institutions -- has also planned National Banking Training Institute (NBTI). The training institute has a support base of $2 million from Asian Development Bank (ADB). "It will be developed as a self-sustainable institute that will be run by a professional CEO," said Nepal Rastra Bank (NRB) deputy governor Bir Bikram Rayamajhi, inaugurating the one-day seminar on 'Corporate Good Governance in Banks and Financial Institutions' organised by Development Bankers Association here yesterday.
Giving his presentation on Corporate Good Governance in Banks and FIs, Kumari Bank chief executive officer Radhesh Pant said that lack of good corporate governance will result in collapse of banks and financial institutions.
"Good corporate governance will increase depositors' trust leading to rise in premium, Price to Earning (PE) ratio and share price of institutions as a whole," he said adding that corporate good governance will also increase access to finance, spruce up brand image and help mobilise funds.
"Banks are the custodians of public money and thus they need to ensure good corporate government for the better management of public money," Pant added.
"Lack of good corporate governance will lead banks and financial institutions to suffer a fate similar to that of Nepal Development Bank (NDB)," Bohara said.
"The central bank should ensure our representation in Credit Information Bureau (CIB)," said Development Bankers Association president and CEO of Malika Bikas Bank Jhapat Bohara, adding that Development banks also want to be the part of Central Depository Company, Banking Training Institute and Clearing House.
The Central Depository Company that is being established for the modernisation of the domestic capital market will have 50 per cent share of Nepse, 10 per cent share of CIB, 15 per cent of CIT and 25 percent of a group of six commercial banks -- Standard Chartered Bank, Nabil Bank, Nepal SBI Bank, Bank of Kathmandu, Nepal Investment Bank and NIC Bank -- as promoters. Bohara urged the Nepal Bankers Association (NBA) to give development banks also a chance to be part of it.
NBA -- along with Nepal Rastra Bank (NRB) and other financial institutions -- has established Nepal Clearing House Ltd that will commence Automatic Check Truncation and Clearing Systems to be evolved into a nation-wide payments system. It has 60 per cent share of NBA, 15 per cent of SCT, 10 per cent share of NRB and the remaining share is planned to be distributed between development banks and finance compnaies.
NBA -- with the help of NRB and Rural Microfinace Development Centre (RMDC) and other financial institutions -- has also planned National Banking Training Institute (NBTI). The training institute has a support base of $2 million from Asian Development Bank (ADB). "It will be developed as a self-sustainable institute that will be run by a professional CEO," said Nepal Rastra Bank (NRB) deputy governor Bir Bikram Rayamajhi, inaugurating the one-day seminar on 'Corporate Good Governance in Banks and Financial Institutions' organised by Development Bankers Association here yesterday.
Giving his presentation on Corporate Good Governance in Banks and FIs, Kumari Bank chief executive officer Radhesh Pant said that lack of good corporate governance will result in collapse of banks and financial institutions.
"Good corporate governance will increase depositors' trust leading to rise in premium, Price to Earning (PE) ratio and share price of institutions as a whole," he said adding that corporate good governance will also increase access to finance, spruce up brand image and help mobilise funds.
"Banks are the custodians of public money and thus they need to ensure good corporate government for the better management of public money," Pant added.
"Lack of good corporate governance will lead banks and financial institutions to suffer a fate similar to that of Nepal Development Bank (NDB)," Bohara said.
Monday, August 10, 2009
Two groups bid to revive sick Nepal Development Bank
Two groups have submitted proposals to investigation officer Tirtha Raj Upadhayay to revive troubled Nepal Development Bank (NDB).
Nimbus Group of Jagdish Agrawal alongwith World Link, ICTC Group, Golchha Group, Kailash Chandra Goyal, Ravi Singh Group, Guna Chandra Bista and others have submitted one proposal while Badri Bhattarai, current promoter of NDB, and his group have submitted another proposal.
"After investigation, we found that NDB has Rs 90 million cash but the deposits of the public -- except organisations -- come to around Rs 350 million," said Upadhyaya whom Patan Appellate Court on July 29 appointed the investigation officer to report and start the insolvency process.
The Court has ordered that small depositors be paid first. "If Rs 90 million is distributed among the public depositors, they will one get just one-fourth of their real deposit," he said adding that the definition of small depositors was also unclear.
"Revival of the troubled bank might be the best option," he said adding that he has called both the groups to discuss their detailed capital plan. "After meeting both the groups and discussing their proposals in detail, if I am convinced I will advise the court to revive the bank," the senior Chartered Accountant by profession Upadhayay added.
Nimbus Group and its associates are ready to deposit Rs 32 million as and when Nepal Rastra Bank (NRB) asks and also to prepare a capital plan within three months. "We are planning to inject Rs 320 million after detailed study," said Sudarshan Raj Pandey, a representative of the Nimbus Group that also plans to buy out the promoters who are responsible for damaging the bank. "We will buy the shares of the promoters responsible for damage to the bank at one rupee per share and buy them out," he said adding that after that they plan to issue rights shares to increase the capital to Rs 640 million by the end of 2010.
If the rights shares are not sold completely, we will buy them," Pandey said assuring the depositors that if they want to take their deposit back after Nimbus starts running the bank, they will be allowed to do so.
The other group led by Badri Bhattarai has claimed that it is ready to inject Rs 640 million but has not elaborated its plan.
Meanwhile, the Supreme Court has declined to issue a stay order as demanded by the Employees' Provident Fund (EPF) to protect its deposit in the process of liquidating NDB.Directing to return the deposit of the small depositors first, Patan Appellate Court had okayed the liquidation of NDB. The court has directed to start the process of liquidation as per the Insolvency Act 2007.
Nimbus Group of Jagdish Agrawal alongwith World Link, ICTC Group, Golchha Group, Kailash Chandra Goyal, Ravi Singh Group, Guna Chandra Bista and others have submitted one proposal while Badri Bhattarai, current promoter of NDB, and his group have submitted another proposal.
"After investigation, we found that NDB has Rs 90 million cash but the deposits of the public -- except organisations -- come to around Rs 350 million," said Upadhyaya whom Patan Appellate Court on July 29 appointed the investigation officer to report and start the insolvency process.
The Court has ordered that small depositors be paid first. "If Rs 90 million is distributed among the public depositors, they will one get just one-fourth of their real deposit," he said adding that the definition of small depositors was also unclear.
"Revival of the troubled bank might be the best option," he said adding that he has called both the groups to discuss their detailed capital plan. "After meeting both the groups and discussing their proposals in detail, if I am convinced I will advise the court to revive the bank," the senior Chartered Accountant by profession Upadhayay added.
Nimbus Group and its associates are ready to deposit Rs 32 million as and when Nepal Rastra Bank (NRB) asks and also to prepare a capital plan within three months. "We are planning to inject Rs 320 million after detailed study," said Sudarshan Raj Pandey, a representative of the Nimbus Group that also plans to buy out the promoters who are responsible for damaging the bank. "We will buy the shares of the promoters responsible for damage to the bank at one rupee per share and buy them out," he said adding that after that they plan to issue rights shares to increase the capital to Rs 640 million by the end of 2010.
If the rights shares are not sold completely, we will buy them," Pandey said assuring the depositors that if they want to take their deposit back after Nimbus starts running the bank, they will be allowed to do so.
The other group led by Badri Bhattarai has claimed that it is ready to inject Rs 640 million but has not elaborated its plan.
Meanwhile, the Supreme Court has declined to issue a stay order as demanded by the Employees' Provident Fund (EPF) to protect its deposit in the process of liquidating NDB.Directing to return the deposit of the small depositors first, Patan Appellate Court had okayed the liquidation of NDB. The court has directed to start the process of liquidation as per the Insolvency Act 2007.
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