Thirty firms suspended for not paying renewal fee

Nepal Stock Exchange suspended some 30 listed companies – including nine finance companies, five development banks, one insurance company, one hydropower company, two trading companies, one hotel, one film development corporation, and nine manufacturing companies, apart from Nepal Electricity Authority's debenture – due o their failure in paying their annual listing renewal fee for the current fiscal year.

Among the suspended companies, shares of Multipurpose Finance, Himalayan Finance, Pashchimanchal Finance, Biratlaxmi Development Bank, and National Hydropower Company were traded last week.

Listed companies are supposed to pay the annual renewal fee within three months of the end of the fiscal year, but these companies failed to pay within the deadline, thus their trading was suspended as per regulation.

This year, Nepse had even issued a notice for listed companies to pay the annual listing fee on time. Companies tend to overlook the matter out of utter carelessness which inconveniences investors.

Among the suspended ones, three – Nepal Development Bank, Jyoti Spinning Mills and Samjhana Finance – are going through liquidation. Share trading of Capital Merchant Banking and Finance, General Finance, Gurkha Development Bank, Crystal Finance and NB Insurance was suspended due to action taken against them by the regulators.

Likewise, nine manufacturing companies, two trading companies, and Hotel Yak and Yeti have not been paying the annual listing fee for the last few years in the hope of getting de-listed.

Last year, Nepse had to suspend the trading of 45 listed companies including Nepal Electricity Authority’s debentures. A year back, trading of 28 listed companies, including four development banks and four finance companies, was suspended due to a delay in paying the listing renewal fee.

Every year, Nepse has to suspend the trading of listed companies for their failure in renewal of listing fee. The renewal fee depends on the capital structure of the company – the maximum that companies have to pay is Rs 50,000 for those with a capital base greater than Rs 100 million.

The suspended companies scramble to pay the renewal fee the day the transaction is suspended. The suspension of trading arising from sheer negligence of the companies is also an instance of bad corporate governance.

Central Bank declares Gorkha Development Bank 'troubled', to send Samjhana Finance to liquidation

The central bank declared Gorkha Development Bank a 'troubled financial institution' and decided to send Samjhana Finance to liquidation.
The central bank’s board of directors meeting today evening has taken the decision under the Nepal Rastra Bank Act that gives the central bank the right to declare any banks and financial institutions troubled in case of financial discrepancies.
The bank will now be restricted to mobilise deposits and float loans after being declared a troubled financial institution.
Gurkha Development Bank (Nepal) Ltd -- promoted by British Gurkhas had been in trouble after a scandal over ‘embezzlement’ of Rs 130 million by its former executive director D B Bomjan and other staffers.
The bank replaced its ‘tainted’ executive director Bomjan and his team with chairman Nirmal Gurung in the second week of March. But last week, Bomjan again took over ‘forcefully’ replacing Gurung.
The central bank could not remain silence in such cases as the banks and financial institutions are losing their focus from good governance and regulatory compliance and involved in petty interest exposing the depositors’ money to risk.
Earlier, the central bank had directed Gurkha Development Bank to prepare a Due Diligence Report after former executive director DB Bamjan was found to have been involved in embezzlement while issuing credit to a customer Panchalal Maharjan.
Recently most of the banks and financial institutions have come into trouble after they failed in maintain good governance.
Similarly, the central bank decided to send Samjhana Finance after its explanation could not satisfy the central bank. The finance company submitted its explanation with proposal of new management that would take the management over and run it but central bank rejected the proposal and today decided to send it to the liquidation.
After declaring Samjhana Finance a troubled financial 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 Banepa-headquartered finance company has an outstanding loan worth Rs 210 million and its non-banking assets stands at Rs 300 million.

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.