Crisis-ridden FIs plan to give Dashain relief to depositors
KATHMANDU, OCT 04 -
Crisis-ridden financial institutions (FIs) have tried to give some relief to their depositors ahead of the Dashain festival by repaying a certain amount of their deposits.
The troubled Capital Merchant and Finance Company has doubled the withdrawal amount for individual depositors from September 23. Capital Merchant CEO Bashudev Acharya said they were making deposit repayments in the range of Rs 20,000 to Rs 90,000 based on the deposit amount.
“Individuals having less than Rs 100,000 deposits will receive Rs 20,000, while those having more than Rs 2 million will receive Rs 90,000,” said Acharya. Earlier, the company was providing Rs 10,000 per month to individuals having Rs 100,000 deposits, while the maximum amount the company was repaying was Rs 50,000.
Capital Merchant aims to collect an estimated Rs 80 million by selling collaterals put up by defaulters before Dashain. “A majority of individual depositors may get back their deposits by Dashain,” said Acharya, adding the company also plans to give a certain amount to depositors for Tihar as well.
Samajhana Finance, which is currently undergoing a liquidation process, has also decided to provide a certain amount to depositors. “I am not sure how much I can distribute before Dasahain, but I have committed to depositors that the deposit repayment would probably start from the next week,” said Bijaya Raj Ghimire, liquidator of the company.
The company owes over Rs 430 million to around 4,500 depositors who have not received a single penny ever since the central bank recommended the Patan Appellate Court to send the finance company in liquidation on June 10, 2010.
“A few big loanees have committed to pay loans within a few days,” said Ghimire. “Based on the amount we receive from the loanees, the size of the repayment will be determined.”
Among the two FIs, Capital Merchant, however, has been repaying deposits on instalment basis after recovering loans—either through normal process in case of good loans or by selling collaterals of bad loans.
Capital Merchant’s Achayra said the number of active depositors has come down to 2,100 from over 20,000. He said most of the company’s small depositors have already received their money.
Capital Merchant has total liabilities of Rs 1.6 billion to depositors. Individual depositors have Rs 570 million to get back, while the rest belongs to institutional depositors.
The company has loans worth Rs 2.6 billion to be recovered from defaulters, including its former chief executive Pawan Karki who has fled to the US. The collateral put up by Karki is substandard and its value is around half of the loan amount.
As the company has good loans worth only around Rs 50 million, recovering the amount necessary to repay the deposits will be a tough job.
Samajhana’s Ghimire is also not sure whether the collateral sales would generate enough money to pay back all the deposits. The liquidator is yet to explore the extra collateral that has not been booked as non-banking assets. “The collateral sales would only generate the required funds if the real estate market improves,” said Ghimire.
Source: The Kathmandu Post
