NRB points gun to NDB promoters

Nepal Rastra Bank (NRB) has sought clarification from three promoters of Nepal Development Bank (NDB) why they should not be penalised for involvement in the board of Nepal Cooperative although they are already in the NDB board.
NRB is contemplating to penalise Amar Gurung, the chairman of both NDB and Nepal Cooperative with a fine of Rs. 200,000 for providing false report about his involvement to the NRB, said Gopal Kafle, executive director of NRB.

Likewise, NRB has also sought to penalise two other board members Kiran Joshi and Lab Raj Joshi with a fine of Rs. 100,000 each for representing both institutions.

Meanwhile, depositors and share holders of Nepal Development Bank (NDB) staged a sit-in at Nepal Rastra Bank (NRB) on Thursday demanding withdrawl of their deposits and investments. Many NDB depositors and investors who gathered in front of NRB returned disappointed.

Among them was Binod Akauliya of Dhading who was worried about his sister-in-law 's deposit of Rs. 500,000 in NDB. However, they couldn't get assurance from the central bank that they would get all their money back.

NRB Governer Dipendra Bahadur Chhetri told them the central bank's decision was aimed at safeguarding depositors interest. “We haven't started the liquidation process yet,” Chhetri said,”If NDB's clarification fails to satisfy us, the central bank will initiate the process as per law.”

As NRB gears up for the liquidation process, more and more irregularities on the part of NDB's promoters are surfacing. It was found that its Chairman Amar Gurung happens to be the chairman of Nepal Cooperative also. NDB still has deposits of Rs. 90 million in the cooperative.

"Even we were not informed about his involvement in the cooperative as chairman," said Chetri at ameeting with depositors and shareholders of the bank on Thursday. The existing Bank and Financial Institution Act has barred directors of any bank from becoming director of other financial institutions.

The Act also bars any financial institution from investing in projects in which the bank's promoters are involved. It had given loans worth Rs. 10 million to Gorkha Hydropower project in which the bank has a share investment of Rs. 75.9 million, according to Kafle. "We had directed the bank to sell those shares and recover the loans but the bank's promoters didn't listen to us," Kafle said. In another case, the bank took control of the property of Holyland International School worth Rs. 140 million because of the school's failure to repay loans. But, the bank sold its property to the International Foundation of Health and Medical Science (IFHMS) at just Rs. 90 million in which Nepal Cooperative had invested. "The IFHMS has not paid a single rupee to the bank but the bank allowed it to own a certain plot of Holyland'," Kafle said. NRB had directed the bank to re-evaluate the the property sold to IFHMS.

Shareholders who had applied for right shares are demanding that at least their invested money be returned. Jaya Prakash Bhuju, one of the shareholder at NDB who had invested Rs. 80,000 in rights shares told the Post that he wanted his recent investment back. Both the NRB and SEBON are in confusion whether shareholders of the bank will be getting the money invested in the recent issuance of rights shares, which are yet to be allotted.

SEBON chairman Surbir Thapa said that they felt the money invested in the rights shares should be returned as it had not been allotted. "We should hold legal consultation before a decision on it," he said.
Source:
ekantipur.com