Fewa Finance chairman slapped with half-million-rupee fine

KATHMANDU/POKHARA, NOV 02 -

The Nepal Rastra Bank ( NRB ) has slapped a half-million-rupees fine on Bindu Kumar Thapa, chairman of Pokhara-based Fewa Finance Limited, and removed him from his post after he was found involved in ‘insider lending’.

The regulator, however, has only warned other board members and top management of the company. After this action, Thapa cannot sit on board of any BFIs for the three years.

NRB Spokesperson Bhasker Mani Gnawali confirmed the regulator’s action against Thapa. “An onsite inspection by a team of supervisory officials from the central bank before Dashain found Thapa’s involvement in insider lending, in which Thapa was direct or indirect beneficiary,” said Gnawali.

Insider lending is the advancing of loans by a bank or financial institution to its own officer or directors. NRB has barred banks and financial institutions (BFIs) from practicing such lending. “Thapa was found advancing loans to himself and his kin by creating fake borrowers,” said a NRB official, who was also a member of the inspection team.

According to a senior NRB official, Thapa was also found ‘evergreening’ such loans. “In one of the cases, he was found borrowing Rs 100 million to purchase land and after some time he borrowed another Rs 100 million to repay the previous borrowing,” said the official.Besides, the onsite inspection team found Thapa responsible for bad corporate governance which is slowly taking its toll on the finance company. Thapa also directed company officials to extend loans to his friends, the team found.

Initially, Thapa obstructed the inspection team from checking the credit files. “He even tried to intimidate us,” said a member of the inspection team. Thapa, however, said the regulator did injustice against him and took action without proper evidence. “I was helping a few of my friends in repaying their loans by borrowing money from some other friend,” said Thapa. “But central bank officials took action against me for creating fake borrower files.”

Admitting that some exchange of words took place between him and monitoring team members, Thapa denied that he obstructed them from checking the borrower files.

Despite irregularities by its chairman, the financial health of the finance company is sound, according to the central bank. “The company is in pretty good financial health and a majority of lending is good and performing,” said the senior NRB official. “We have directed the company to regularise loans issued to Thapa by auctioning the collaterals. The finance company has informed us that 80 percent of the loan has been recovered.”

Source: The Kathmandu Post