Findings project NDB in worse light

The financial condition of Nepal Development Bank (NDB) is found to be worse than what Nepal Rastra bank initially thought last week when the central bank initiated the sick bank's liquidation process.
The lastest findings of NRB reveal that NDB's losses have reached Rs. 690 million and its non-perfoming loan (NPL) is at 55 percent. According to the NRB sources, capital adequacy ratio of the bank is negative by 41 percent. Earlier, it was reported that the bank's loss was Rs. 670 million.
The bank has deposits of Rs. 190 million in various financial institutions including Rs. 90 million in Nepal Cooperative.
However, the promoters of NDB dismissed the NRB claim on Tuesday, a week after the central bank began the liquidation process. In a press meet on Tuesday, its promoters claimed NDB's financial condition better than what the NRB had stated. Uttam Pun, one of the main promoters and patron of the bank, claimed that NDB's loss stood at Rs. 620 million and not Rs 670 million as made public by the NRB.
The promoters also accused the central bank of taking action against their bank even though it was in the process of turning the corners.
Pun claimed that NRB moved against it by misinforming the public about its financial status.
In its letter to NDB, the NRB has accused it of not following the central bank's directives to improve the bank's financial situation. The central bank charged that NDB had disobeyed its instructions to keep adequate capital fund, decrease bad loans to 9 percent and sell all non-banking assets.
NDB's failure to sell its shares in Gorkha Hydropower and recover the loans provided to it, and its inability to recover its deposits from Nepal Cooperative are its other weaknesses, said NRB.
However, Pun claimed that the bank has been returning the deposits of the Nepal Army Welfare Fund and the Employees' Provident Fund and never sent back its depositors empty-handed even after the bank was prevented from collecting deposits time and again.
"We have provisions for losses of up to Rs. 360 million, and we will be in a comfortable position to reduce them," he said.
He blamed NRB of being biased towards NDB and added that there were other banks in a similar situation but the central bank did not treat them with the same harshness.
During the press meet, ordinary shareholders voiced their support for Pun and said that they were ready to follow the promoters to save the bank.
Tension arose between Pun and journalists after he continuously blamed them for the bank's current situation. The media persons were angered by his charges that they wrote in favour of NRB's move and unnamed "conspirators" who wanted to sink the bank. Pun is believed to have a powerful influence over the bank's management although his role is confined to being a patron.