CIB books 148 for Apex scam

The Central Investigation Bureau (CIB) of Nepal Police has filed a case of banking fraud against 148 persons allegedly involved in Apex Development Bank scam.
The CIB – after investigating the alleged fake documents for two months – has submitted the report to the Office of Special Government Attorney in Lalitpur, today. The accused have been charged under the Banking Offence and Punishment Act.
On March 16, police had arrested 21 people, including staff, board of directors, borrowers, valuators and former chief executive officer Bishnu Prasad Dhital of the erstwhile Apex Development Bank for indulging in unethical loan releases.
According to the CIB officials, the alleged masterminds of the fraud – Govinda Upadhyaya and Basanta Malla – are hiding in the US. The CIB plans to request the Interpol to issue a diffusion notice against them, though it is not sure that the US will handover them as earlier also the US has refused to handover an alleged banking fraud.
The CIB arrested the bank staffs as they have been accused of releasing loans amounting to Rs 1.50 billion through fake loan documents, insufficient collateral and other illegal means from Durbar Marg, Lokanthali, Itahari, Surkhet and Nepalgunj branches. However, the Apex Development Bank and Nepal Credit and Commerce (NCC) Bank had merged a few months ago.
The accused are said to have been involved in fake transactions during post-merger integration between NCC Bank and Apex Development Bank.
According to CIB, out of the 128 bank scam files, some 33 are from Itahari, seven from Surkhet and 13 from Nepalgunj. The CIB went through 85 files before filing a case based on the findings of those files. According to the police, it will take time to complete the investigation of total amount that was siphoned from Itahari, Surkhet and Nepalgunj branches.

Central bank also takes over Nepal Share Markets and Finance

The central bank has taken over the board and management of troubled Nepal Share Markets and Finance.

The second takeover by the central bank in a week has, though came late, is expected to improve the financial health of the class C financial institutions that has been declared troubled since last two year.

According to the regulation, a financial institution that is declared troubled has to be taken over by the central bank, if it doesnot improve within six months.

A three member team led by Nepal Rastra Bank deputy director Santosh Kumar Ghimire will take charge of the finance company for six months from Sunday.

Former chairman of Nepal Share Markets and Finance Yogendra Shrestha was arrested on the charge of embezzlement of Rs 2.66 billion by Central Investigation Bureau (CIB) last year as he was found involved in creating fake borrowers and misusing the deposits of the public.

Earlier this week, the central bank has taken over the management of the NCC Bank suspending the board due to prolonged dispute among the board of directors. Likewise, in 2006, the central bank had taken over the Bank of Kathmandu and returned it within three months. However, the central bank has failed to improve the financial health of Gurkha Development Bank and is still managing it, without any solution in near future.

Central bank takes over NCC Bank management for five months

Suspending the current board of director, the Central bank took over the management of the Nepal Credit and Commerce (NCC) Bank due to power tussle among the board members.

The board meeting of the central bank today decided to take over the management of the NCC Bank – despite its good financial health – for five months due to prolonged dispute within the bank's board that could pose serious threat to not only public depositors and investors' interest but also the financial system.

The central bank appointed three-member team led by Nepal Rastra Bank director Laxmi Prapanna Niroula will hold special annual general meeting and hand over the management in five months, according to the central bank that has sent deputy director Ramesh Acharya and assistant director Resham Raj Regmi to assist Niraula. "The team will also audit the accounts and find possible ways to increase paid up capital as the bank still has not complied with the mandatory paid up capital provision of at least Rs 2 billion," the central bank press note stated. "Likewise, the team will also look into possibility to merger with another bank or financial institutions. The team will also recover financial loss incurred from risky investment."

Chairman of the bank Prithvi Raj Ligal, along with directors Ved Man Singh Malla, Badri Narayan Manandhar, Narayan Raj Tiwari, Basudev Giri and Gyan Hari Shrestha favoured the notorious NB Group, while Tirtha Pradhan, Ashok SJB Rana and Hari Prasad Bhattarai backed the stock investor Nirmal Pradhan group making a vertical split in the board. The board has been divided into two groups –  one favouring NB group and the other Pradhan group – in a bid to capture the bank.

The problems started after Pradhan group accused the NB group of insider lending to NB Group-related business without following proper procedures.

Since the directors' long drawn feud spilled out of the board room, The central bank had, also, tried to mediate between the directors by summoning them for talks more than 15 times but they were adamant and their friction was beyond mending. At last, the central bank had on December 31, 2013, given a 15-day ultimatum to the bank seeking explanation on why it should not suspend the board to safeguard the interest of investors and depositors.

But one of the faction led by Pradhan went to Patan Appellate Court asking for permission to hold annual general meeting. The Court last week rejected the plea and opened the door for the central bank to intervene.
The bank has not been able to hold even board meeting since November 2, 2013, due increasing tug of war among the two factions.

The bank has deposits worth Rs 22.02 billion and floated loans worth Rs 17.6 billion as of mid-January. It has more than 14.7 million primary shares and 14 million units of promoter shares listed at Nepal Stock Exchange (Nepse). Its stocks have been traded at around Rs 400 per unit at the Nepse. It has posted Rs 32.5 million profits in the first quarter of the current fiscal year.
As the regulatory authority, the central bank is empowered to take over the management of any banks and financial institutions under NRB Act 2063 (Section 54), if it is dissatisfied with the given explanation. The regulator has earlier too taken over the managements of NB Group promoted Nepal Bangladesh Bank (in 2006), Bank of Kathmandu (in May 2009), and handed over the management back. NCC Bank is the third commercial bank that has been taken over the central bank, though Nepal Bank Ltd is also under the central bank due to Financial Sector Reform Programme and Gurkha Development Bank due to also feud between the board of directors.

Central bank to seek clarification from NCC Bank

Central bank is going to seek a clarification from the NCC Bank on why its board should not be dissolved and taken over as the power tussle might hit the financial health of the bank and send negative message in the financial market.

Since the daily operation of the bank has also been started being affected by the tug of war between the two warring sides, "the central bank has to intervene but it is under discussion on how to intervene," according to a senior central bank official. "After the board room dispute came out in public and one group sought the help from the central bank, Nepal Rastra Bank is, most possibly, seeking clarification on Friday, before taking over. As both the factions have been blaming each other for corruption and financial indiscipline, the central bank should also take action to save the financial health of the bank and and depositors' trust on it."

The board room dispute started after the board split into two groups favouring NB Group – which has its key members on the run after they have been booked by the Nepal Police for financial crimes – and Nirmal Pradhan, a stock investor.

The power tussle that started a year ago, reached the central bank last week, after some six board members near to the NB Group tendered their resignation to the monetary authority.

Likewise, the NB Group and Nirmal Pradhan-led group is trying to get hold of not only Nepal Credit and Commerce Bank – that witnessed its stocks being traded at Rs 440 per unit today – but also National Hydropower that has been trading its stocks at around Rs 80 these days due to suspicious transactions and financial indiscipline by the notorious NB Group.

Nepal Bangladesh Bank – also promoted by the NB Group – was taken over by the central bank some 10 years ago due to financial indiscipline and bad corporate governance. In recent years, corporate governance has become a serious issue with the financial institutions.

CIB blacklists NB Group MD Laxmi Bahadur Shrestha

Credit Information Bureau (CIB) has blacklisted managing director of NB Group Laxmi Bahadur Shrestha for not paying Narayangarh-based Shubhechchha Bikas Bank’s loan.
Shrestha issued a check of an account that did not have sufficient balance in the account and the cheque was bounced.

Once a person is blacklisted, he/she will be ineligible to be in any banks and finance company’s board member. Similarly, if a person is fined by the regulator, he/she is also ineligible to be in the banks and financial institutions board or insurance company. 
After the blacklisting, Shrestha will also have to resign from the board of NB Insurance, according to the Insurance Board’s regulation.
The central bank and the Insurance Board, both, regulations bar the blacklisted person or the firm to hold any position in the banks and financial institutions, and insurance company’s board.
Shrestha was also fined earlier Rs 500,000 for misappropriating fund of the Nepal Bangladesh Bank’s (NBB), where he was one of the board members. Following the fine, he has resigned from the bank’s board of director.
The NB Group that promotes NCC Bank and National Hydropower apart from Nepal Bangladesh Bank has been in news for all the wrong reasons lately.
Nepal Rastra Bank (NRB) has recently also identified Shrestha as one of the promoters involved in embezzlement of over Rs 1 billion from Nepal Bangladesh Bank´s coffer.
Similarly, the NB Group promoted National Hydropower has also not been able to hold its annual general meeting since last three fiscal years and the board members are divided into two groups, one group is for holding AGM whereas the other group led by Shresthaais against the AGM. However, Shrestha is no more in the National Hydro board as he has already ben blacklisting.

Transaction amount goes up, Nepse down

The contribution of Group-A companies -- the blue-chip shares in the domestic market -- dropped to 24.69 per cent from last week's 50.86 per cent. However, the transaction has gone up by 103.88 per cent to Rs 462.61 million against last week's decrease of 1.76 per cent.
The Nespe also lost 3.18 points to 667.43 points from last week's closing of 670.61 points. The 78-scrip sensitive index lost 1.54 points to 177.36 points from last week's closing of 178.90 points. The float index -- calculated on the basis of real transactions -- also shed 0.19 points to close at 64.09 points.
The shareholders of the commercial banks, development banks, finance companies and insurance companies lost while the hotels, hydropower and trading sub-groups' share holders gained this week. The manufacturing sub-group did not see any transaction of its shares but others sub-group -- that has Nepal Telecom shares under its belt -- after the plunge it recovered to close at 646.19 points -- the closing of last week.
This week NCC Bank (with Rs 98.30 million) topped the chart in terms trading amount followed by National Hydropower (with Rs 87.89 million), Nepal Bangladesh Bank (with Rs 63.83 million), Bank of Kathmandu (with Rs 17.02 million) and Standard Chartered Bank Nepal (with Rs 15.53 million).
Similarly, in terms of share units traded National Hydropower topped the chart as its 9,82,000-unit of shares changed hands. But in terms of number of transactions, Pashupati Bikas Bank topped the chart with 604 transactions.

Nespe defies market fundamentals

The shareholders of the development banks sub-group gained this week defying the market fundamental. The development banks sub-group -- despite the central bank's decision to send Nepal Development Bank (NDB) to liquidation -- flared by 12.34 points to close at 769.25 points. Contrary to the surge in the development banks sub-group's index, the market pundits were predicting the drop in the development bank's index after the bold decision of the central bank.
The development banks and hotels sub-groups are the only two sub-groups -- out of nine sub-groups -- that witnessed growth this week. The hotels sub-group surged by 1.45 points to close at 366.45 points.
However, the Nepse plunged below 700 points as other seven sub-groups indices dropped pulling the Nespe down by 19.74 points to close at 698.88 points from last week's closing of 718.62 points. The plunge in Nepse justified the 'unnatural growth' a week ago.Two sub-groups -- trading and manufacturing -- indices remained unchanged at 281.78 points and 434.32 points as Nepse didnot see any transactions of their shares this week.
The sole secondary market might still not see any encouraging growth in a couple of weeks as two new primary issues worth Rs 495.6 million -- much awaited Chilime Hydropower (worth Rs 230.4 million) and Vibor Bikas Bank (worth Rs 265.2 million) -- are in pipeline.
The market this week gained on only one day -- out of the five day trading -- on Tuesday. The other four days, Nepse lost as the present uncertainty is making the investors nervous and they are looking for exit.
The transaction amount this week has also gone down by 5.56 per cent to Rs 345.18 million as against the last week's fall of 13.12 per cent to Rs 278.4 million. The contribution of Group-A companies -- the blue-chip shares -- also went down by 49.01 per cent as against last week's 67.78 per cent.
The shareholders of others, commercial banks, hydropower companies, insurance companies, and finance companies sub-groups lost. The others sub-group lost a whopping 41.11 points to 675.56 points and commercial banks sub-group followed with a loss of 19.44 points to 717.11 points.Similarly, hydropower companies' sub-group plunged by 17.27 points to 861.39 points and insurance companies sub-group shed 6.43 points to 644.35 points. The finance companies sub-group witnessed a marginal loss of 0.62 point as it closed at 761.25 points.
The 78-scrip sensitive index -- considered the blue chip shares in the domestic market -- also lost 3.67 points to 186.64. The float index -- calculated on the basis of real transactions -- shed 1.50 points to close at 67.15 points.
This week NCC Bank (with Rs 40.75 million) topped the chart in terms trading amount followed by Standard Chartered Bank Nepal (with Rs 36.49 million), Prabhu Finance (with Rs 36.45 million), Paschimanchal Bikas Bank (with Rs 27.44 million) and Bank of Kathmandu (with Rs 19.21 million).Similarly, in terms of share units traded NCC Bank topped the chart as its 1,35,000-unit of shares changed hands. But in terms of number of transactions, Prabhu Finance topped the chart with 2274 transactions.
The sole secondary market this week also listed 10 million-unit of shares each of -- Bank of Asia Nepal and Citizens Bank International -- that would see their transaction after seven days.


Nepse announces 20 per cent cash dividend
KATHMANDU: The 27th AGM of Nepal Stock Exchange Ltd (Nepse) decided to distribute 20 per cent cash dividend from the profit of fiscal year 2007-08. This is the first time the Nepse has announced cash dividend. Chairman of Nepse Dr Narayan Prasad Paudel proposed the cash dividend in the AGM as the Nepse has posted Rs 70.9 million net profit -- an increase by 258 per cent in comparison to the previous year -- during the fiscal year 2007-08.

NB Group's trading dominates Nepse floor

The NB Group's institutions witnessed heavy selling today. Nepal Bangladesh Bank, Nepal Credit and Commerce (NCC) Bank and National Hydropower saw their 5,560-unit, 5,250-unit and 5,910-unit shares transactions at the sole secondary market today.
The number of shares traded of these three institutions is the largest at the Nepse today. They were traded at Rs 1,731,440; Rs 1,598,380 and Rs 767,430. "The confirmation of new governor's appointment might have sent cold wave to the NB Group that has been in news for all the wrong reasons," said one broker in condition of anonymity.
Meanwhile, the secondary market closed 8.59 points lower today to 651.22 points, The sensitive index -- barometer of A group companies -- ended 3.98 points below to 168.91 points from its previous close on Tuesday. Similarly, the float index was also down by 1.18 points over its previous close and ended trade at 63.55 points.
The biggest loser today is development banks group that lost 28.87 points to 910.5 points, followed by finance companies group that lost 19.09 points to 897.41 points. The banking group also shed 16.22 points to 611.17 points. However, Insurance companies group and others group gained. The others group gained 11.74 points to close at 628.57 points.