Capital Merchant Banking under NRB scanner
Sat, Jun 25, 2011 12:00 AM on Others,
KATHMANDU, JUN 25 -
Supervision by Nepal Rastra Bank (NRB) has unearthed misappropriation of about Rs 1.4 billion by Capital Merchant Banking and Finance (CMBF) while providing loans. According to an NRB source, CMBF has provided big loans to non-existent projects without adequate collateral. “We suspect the loans have gone to the directors themselves on the pretext of lending to a third party,” said an NRB official.
Alarmed by the scale of misappropriation, NRB on Friday froze the bank accounts and lockers of the directors and senior staff of CMBF.
Among the CMBF bosses having their bank accounts frozen are chairman Bigyan Prasad Poudyal and board members Laxman Prasad Poudyal, Dambar Bahadur Basnet, Som Raj Regmi and Susma KC. The accounts of senior staff including chief executive officer Deepak Raj Sharma have also been frozen. The Poudyal duo are former NRB employees, according to CMBF’s website.
Earlier, similar large scale misappropriation was witnessed in Nepal Share Market and Finance at the hands of its former executive chairman Yogendra Prasad Shrestha. He was found to have embezzled more than Rs 2 billion by the central bank’s investigation.
After governance problems appeared, the central bank had rejected CMBF’s request for refinancing a week ago by calling its directors to NRB. On Friday, it shut down its offices due to a liquidity crunch.
NRB spokesperson Bhaskarmani Gyawali said the finance company got into trouble as it failed to recover its loans to the realty sector. “We have strongly directed it to recover the loans and improve its financial situation,” said Gyawali.
He added that public deposits in the finance company were safe as it has already got its individual deposits up to Rs 200,000 insured by the Deposit and Credit Guarantee Corporation. As per the company’s third quarterly report, key financial indicators including capital fund and non-performing loans are sound with capital fund remaining positive at 28.28 percent and NPL at 2.96 percent.
CMBF landed in trouble as institutional depositors pulled out their deposits. It has more institutional depositors than individual depositors, according to NRB.
Meanwhile, the central bank has also frozen the bank accounts and lockers of the directors and senior staff of People’s Finance after it found out that similar misappropriation had occurred there.
Among People’s officials having their bank accounts frozen are chairman Chhabilal Bhusal and board members Swayambhu Ratna Tuladhar, Bhola Nath Pantha, Ashok Kumar Agrawal, Sandeep Bhattarai and Manoj Rimal besides Deepak Raj Pandey, Keshav Prasad Bhattarai and Kabindra Thapa from the management team.
According to a central bank source, People’s chairman Bhusal has been found to have used more than Rs 600 million for his own realty projects on the pretext of lending to third parties.
NRB’s investigation has so far revealed that out of the total Rs 1.06 billion in loans, about Rs 720 million has gone to the realty sector. As People’s could not recover the realty loans due to a recession in the realty sector, it suffered an acute liquidity crunch leading to the closure of its operations a few weeks ago.
Source: Kantipur
Supervision by Nepal Rastra Bank (NRB) has unearthed misappropriation of about Rs 1.4 billion by Capital Merchant Banking and Finance (CMBF) while providing loans. According to an NRB source, CMBF has provided big loans to non-existent projects without adequate collateral. “We suspect the loans have gone to the directors themselves on the pretext of lending to a third party,” said an NRB official.
Alarmed by the scale of misappropriation, NRB on Friday froze the bank accounts and lockers of the directors and senior staff of CMBF.
Among the CMBF bosses having their bank accounts frozen are chairman Bigyan Prasad Poudyal and board members Laxman Prasad Poudyal, Dambar Bahadur Basnet, Som Raj Regmi and Susma KC. The accounts of senior staff including chief executive officer Deepak Raj Sharma have also been frozen. The Poudyal duo are former NRB employees, according to CMBF’s website.
Earlier, similar large scale misappropriation was witnessed in Nepal Share Market and Finance at the hands of its former executive chairman Yogendra Prasad Shrestha. He was found to have embezzled more than Rs 2 billion by the central bank’s investigation.
After governance problems appeared, the central bank had rejected CMBF’s request for refinancing a week ago by calling its directors to NRB. On Friday, it shut down its offices due to a liquidity crunch.
NRB spokesperson Bhaskarmani Gyawali said the finance company got into trouble as it failed to recover its loans to the realty sector. “We have strongly directed it to recover the loans and improve its financial situation,” said Gyawali.
He added that public deposits in the finance company were safe as it has already got its individual deposits up to Rs 200,000 insured by the Deposit and Credit Guarantee Corporation. As per the company’s third quarterly report, key financial indicators including capital fund and non-performing loans are sound with capital fund remaining positive at 28.28 percent and NPL at 2.96 percent.
CMBF landed in trouble as institutional depositors pulled out their deposits. It has more institutional depositors than individual depositors, according to NRB.
Meanwhile, the central bank has also frozen the bank accounts and lockers of the directors and senior staff of People’s Finance after it found out that similar misappropriation had occurred there.
Among People’s officials having their bank accounts frozen are chairman Chhabilal Bhusal and board members Swayambhu Ratna Tuladhar, Bhola Nath Pantha, Ashok Kumar Agrawal, Sandeep Bhattarai and Manoj Rimal besides Deepak Raj Pandey, Keshav Prasad Bhattarai and Kabindra Thapa from the management team.
According to a central bank source, People’s chairman Bhusal has been found to have used more than Rs 600 million for his own realty projects on the pretext of lending to third parties.
NRB’s investigation has so far revealed that out of the total Rs 1.06 billion in loans, about Rs 720 million has gone to the realty sector. As People’s could not recover the realty loans due to a recession in the realty sector, it suffered an acute liquidity crunch leading to the closure of its operations a few weeks ago.
Source: Kantipur
