Auditing of BoK financial status begins

Bank of Kathmandu (BoK) has appointed audit firm B.K. Agrawal and Company to carry out its due diligence audit (DDA), among four bidders.
The board meeting of the BoK held last Wednesday decided to award B. K. Agrawal the DDA contract under which the latest financial status of the bank is reviewed.
Other competing firms were R Bajracharya and Company, G.B and Company and Baker Tilly, Baskota and Company.
After the Nepal Rastra Bank (NRB) took over the bank for three months on May 19 saying that the squabble between the two groups of promoters posed a threat to depositors' interest, the NRB headed board decided to do auditing.
"We need to know about the actual status of the bank at present before holding special annual general meeting (AGM) which will elect a new board," said Laxmi Prasad Niraula, director of the NRB who has been assigned to head the BoK board.
The auditing firm will have to complete the DDA process within 15 days, according to BoK. The bank will hold the AGM after the auditing report is presented to the board. The NRB has however kept open the option of handing over the original BoK management earlier board if the squabbling groups settle their differences and ask the central bank to leave.
The central bank has barred all seven bank's board members including Sanjaya Shah and Radhesh Pant from becoming directors of any financial institution for five years.
The Shah group has however filed a case against the NRB for taking control of the bank over the issue of squabbling triggered by the firing of Pant from the post of managing director on March. The group maintains that the case is strictly 'internal issue' of the bank.
The central bank has however made it clear that it has the right to take action against any financial institution to safeguard depositors' interest.
The BoK has the deposits of Rs. 17.61 billion in its total financial resources of Rs. 20.32 billion. The promoters' contribution to the bank's financial resources stands at just Rs. 840 million.
"The central bank however had not taken over the BoK due to its bad financial health but to warn the bank promoters quarrelling against each other risking the deposits of ordinary people," said an NRB official.
As per the third quarterly report of the bank's financial status, is operating profit stands at Rs. 514 million and its non-performing loans stands at just 1.7 percent.
Source: eKantipur