ADBN may face NRB music for not getting deposits insured

KATHMANDU, JAN 26 -

The central bank may take action Agriculture Development Bank Nepal (ADBN) for its failure to get its individual deposits up to Rs 200,000 insured by Deposit and Credit Guarantee Corporation (DCGC).

The deadline set by the Nepal Rastra Bank (NRB) for commercial banks to get the job done expired in mid-December, and ADBN is the only commercial bank to miss the deadline.

NRB official said they are now pondering on the nature of punishment to be initiated against ADBL. “Although it is a state-owned bank, this is an issue of non-compliance and we are forced to take action against ADBL,” said a senior NRB official.

Among the actions being considered by the central bank against ADBN are first issuing warning, and then forbidding it to work in the areas of foreign exchange. “In the next phase, we can ban on purchasing and selling government securities,” said the official. ADBL, however, said it has no intentions to go against the NRB’s directive and the bank has started process of getting the deposits insured.

Newly appointed ADBL CEO Tej Bahadur Budhathoki said the bank is currently collecting data for the purpose. “Our bank has the largest branch network of 243 and a majority of them are not integrated in the online system, making it difficult for us to collect the data,” said Budhathoki. “Nevertheless, we will be able to complete our data collection within a few weeks.”

The CEO also said the bank has asked DCGC for an extension of the deadline until the end of the current fiscal year. “Although we haven’t exchanged official letters, there has been a verbal agreement,” he said.

Individual deposits worth Rs 110b insured so far

The government’s push for deposit insurance has resulted in the insurance of individual deposits worth about Rs 110 billion with the Deposits and Credit Guarantee Corporation (DCGC) until recently. The number of banks and financial institutions (BFIs) getting their deposits up to Rs 200,000 has reached 189, including 30 commercial banks, 84 development banks, 73 finance companies and 2 microfinance development banks. “Deposits put in 5.5 million individual saving and fixed deposit accounts have been insured so far,” said NRB Spokesperson and DCGC Chairman Bhasker Mani Gnawali.

Source: Kantipur