Big racket suspected in H&B Bank fraud case

KATHMANDU, DEC 15 -

A ‘big racket ’ is suspected to have involvement in the fraud case at H&B Development Bank.

H&B’s Kuleshwor branch manager Niraj Nepal was arrested on Thursday after he was found involved in issuing a huge number of good for payment cheques illegally.

Suspecting the involvement of senior officials of other financial institutions that accepted the cheques issued by H&B, the Nepal Rastra Bank (NRB) on Friday froze bank accounts of the officials concerned, including Baivhava Finance Limited Managing Director Keshav Nar Singh Rajbhandari.

The NRB has also frozen accounts of the traders involved in the case including Manoj Chaurasiya, Jaya Kumar Yadav and Surendra Pradhan. Chaurasiya and Yadav are absconding.

Baibhava was found to have given a credit of Rs 60 million against the good for payment cheques issued by H&B to Chaurasia although he had already taken loans worth about Rs 20 million from the finance company.

Banks and financial institutions (BFIs) cannot lend more than 25 percent of their core capital to a single sector, except for productive and hydropower sectors, as per the central bank’s directive. But Baibhava lent more than half of its core capital to a single group, according to the NRB official.

NRB’s initial investigation has also found that Nepal withdrew around Rs 40 million from H&B in the pretext of depositing the amount in H&B’s account in Nabil Bank. However, the probe found that H&B had just Rs 2.5 million in Nabil Bank.

Both H&B and the central bank could not confirm the exact number of the good for payment cheques issued and the amount withdrawn against the cheques.

H&B CEO Jasoda Sainju said they were receiving several numbers of good for payment cheques from depositors and were yet to confirm the size of the claim. She, however, said only a few such cheques were issued through the bank’s formal system. According to the central bank, many cooperatives have also submitted the good for payment cheques presented by Chaurasiya and Yadav to take loans.

NRB Spokesperson Bhaskarmani Gnawali said the central bank directive has prohibited providing loans against good for payment cheques. “Accepting such cheques as collateral and providing loans is illegal,” said Gnawali.

Good for payment cheques are issued on behalf of depositors to anybody to whom the depositors have liabilities to pay. Such cheques do not bounce as long as the issuer BFI cancels the cheques before they are cashed.

Central bank officials said those who helped the ‘ racket ’ to issue the cheques could also face money laundering charges as they helped take money from the formal system to the informal.

After the exposure of the fraud, H&B witnessed more than the usual transactions on Friday. “I don’t want to reveal the transaction amount, but it was higher than usual,” said Sainju.

The central bank, however, said depositors should not be worried about their money. “The bank has adequate liquidity of Rs 2 billion,” said NRB Deputy Governor Maha Prasad Adhikari.

The central bank has also said those who received genuine good for payment cheques should not worry. “They will get the payment within a few days after the investigation,” he said.

Source: The Kathmandu Post