Crisis ridden- Gurkha Dev. Bank reevaluate its Share face value to Rs.30

Sharesansar, November 25:

Nepal Rastra Bank (NRB) has given green signal to the crisis-ridden Gurkha Development Bank Limited to reduce the face value of its shares based on its latest DDA report.

As per the DDA report, the existing paid up capital of Rs. 66.08 crore will be reduced to Rs. 19.82 crore and also the existing Rs 100 face value will be revised to Rs 30 per share. The total number of Shares will be 19,82,456 units.

Gurkha, which is currently under the central bank’s management, has incurred an accumulated loss of Rs 1.35 arba as of first of the fiscal year 2013-14. Its capital adequacy ratio is negative by 26.62 percent and its paid-up capital is Rs 660 million.

Normally, the face value of a share of banks and financial institutions (BFIs) is Rs 100, but the central bank asked Gurkha Dev. Bank to reduce the face value as per the DDA report to pave the way for a possible merger, or other measures to revive the bank.

Besides lowering the share value, the central bank has also directed the Gurkha management, headed by NRB Deputy Director Bisrut Thapa, to consider other options such as merger.

And, if the bank’s revival is impossible, the management has been told to recommend for sending the bank to liquidation.

It has been one and half years since the central bank took over Gurkha management. The central bank had declared Gurkha crisis-ridden in March 2011 after the institution plunged into crisis due to insider lending and defaults.

Although the development bank was able to substantially reduce Gurkha’s liabilities to individual depositors, the bank still has huge liabilities to institutional depositors, including the central bank itself, Rastriya Beema Sansthan, and Citizen Investment Trust.