Crystal Finance holding its 10th, 11th and 12th AGMs; to endorse 1:1 right shares

ShareSansar, March 14:

Crystal Finance Company Limited is finally holding its overdue Annual General Meetings today much to the respite of its shareholders.

The 10th, 11th and 12th AGMs of the finance company being held at its office building at Thapathali, Kathmandu will approve of 1:1 right shares, besides taking other important decisions, according to a notice issued by the company.

The right shares are being issued to shore up the paid-up capital of the crisis-ridden as directed by the Nepal Rastra Bank.

Its paid-up capital, which should have stood at Rs 20 crore by mid-July last year, still stands at just Rs 70 million.

The AGMs will also give authority to the company’s Board of Directors to pursue merger process with other BFIs.

In September 2012, the central bank had declared Crystal Finance Company crisis-ridden, citing its deteriorating financial health primarily due to insider lending.
 
Much of the loans issued by the finance company had gone to the real estate sector.

 According to a report prepared by the central bank during that time, its lending to the construction stood at a staggering Rs 37.93 crore, while consumer loans account stood at Rs 3.2 crore.

At that point, it had mobilized Rs 91.81 crore in loan while it was able to garner a deposit of just Rs 60.5 crore.
 
Shortly after the central bank declared Crystal as crisis-ridden, Kathmandu Police had arrested a family member one of the promoters of the company for allegedly taking loans worth Rs 44.6 crore through insider lending.
 
The arrested person Dibya Kumar Shrestha’s wife Anju Devi and daughter Alpana are the promoters of the company.

The act governing BFIs prohibits promoters with more than 1 percent share in the concerned BFI from taking loans for themselves and their family members.
 
The central bank had then given a chance to the company to improve its financial conditions. As per which after provisioning for bad loans as well as deducting the amount equivalent to the insider lending, Crystal’s cumulative loss reached Rs 23 million and capital adequacy ratio turned negative by 30.4 percent, according to reports.
 
The company has been strictly directed to bring its non-performing loan to 5 percent and capital adequacy ratio to 11 percent.