Are your deposit safe at Bank?

The central bank and the governing body - Nepal Rastra Bank (NRB) is to declare and liquidate the Nepal Development Bank if the later fails to provide appropriate reason behind the bank’s current financial situation within the period of 15 days.

The meeting of the board members of the NRB on Tuesday had taken the decision to take the step, said the NRB source. He further said that looking at the present financial status of the Nepal Development Bank, it is sure to be liquidate. The bank with the paid up capital of Rs. 320 million has a loss of Rs. 670 million. If the NRB liquidate the Nepal Development Bank then this will be the first time in the Nepalese Banking History that any bank has been declared bankruptcy.

All the accounts in the bank have been freeze, after the NRB’s decision to liquidate the bank along with the accounts maintained by the bank in different financial institution including the central bank.

The central bank had warned and instructed the bank’s management to restructure and maintain the sound financial status since the year 2064 B.S. but had been ignored by the NDB. The investment Rs. of 330 million of the Employee Provident Fund and Rs. 200 million of the Nepal Army are at high risk due to the bankruptcy. The deposit from the general public is Rs. 750 million.

As per the NRB analysis, the assets capacity of the NDB is just around Rs. 100 million, which means that the promoters and the general share holders are cent percent sure to loose their investments. Further the bank recently had increased its capital by issuing right shares worth Rs. 80 million.

NRB has the right to liquidate and dissolve any financial institution having bad financial condition. This recent development has brought a huge attention in the Nepalese banking sector and to other financial institutions which has failed to maintain a sound financial status.
Source: arthakoartha.com