Fresh scandal in Gurkha Development Bank
Fri, Mar 25, 2011 12:00 AM on Others,
The fur is certainly flying in Gurkha Development Bank. In the wake of the central bank seeking clarification from Gurkha’s promoters about irregularities to the tune of Rs 130 million while lending, it has also been revealed that the bank is in the process of purchasing land from its own promoter.
According to NRB spokesperson Bhaskarmani Gyawali, banks and financial institutions (BFIs) cannot purchase assets of promoters as this is an issue connected with conflict of interests.
An NRB probe team assigned to probe the real status of the financial situation and governance of the development bank, found that the bank used the depositors’ money to buy five ropanies of land located at Kamaladi in the Capital owned by Agriculture Premura Holding, a key promoter of the bank.
Agriculture Premura Holding has a 13.07 percent stake in the development bank. “Purchasing promoters’ assets is against the Bank and Financial Institution Act. The Act bars BFIs from abetting cross-interest of promoters,” said Gyawali.
Gurkha Development Bank has already paid Rs 300 million to Premura Holding for the land valued at Rs 900 million severally, according to the central bank probe.
According to NRB sources, the timing of the purchase decision and resignation of Prabin Naulakha who represented Premura Holding on the bank’s board was the same. “It seems Naulakha resigned just for the sake of buying the land,” said the NRB official.
Naulakha admitted that there had been an agreement for purchasing the land. The process of purchasing the land began after a verbal agreement between Premura Holding and bank ex-chairman D.B. Bamjan, who has been recently reinstated amid political pressure, according to him.
“I heard that the purchase process went ahead following the decision of the bank’s board,” Naulakha said. “I am not clear about the board decision as I was absent at that time.”
A board member, however, to comment on the matter. “I can only say anything after seeing the document,” he added.
According to the NRB probe, the price of the land has fixed much higher than the actual market price. “The bank’s board has approved the purchase of the land which Premura Holding had purchased for Rs 300-350 million,” said the NRB source. “ It seems there is a big game of commission.”
Following the allegations of irregularities of Rs 130 million against Chairman Bamjan and others, the central bank initiated the probe in the bank. The NRB has already sought clarification from the bank’s directors asking why they should not be fined Rs 500,000 each. Earlier, the board members except for Bamjan and Nirmal Gurung had given verbal clarifications.
According to the NRB investigation, the bank’s deposit has continued to decline over the last few months after revelations of bad corporate governance. Its deposits have come down to Rs 5 billion as of mid-March from Rs 5.65 billion in mid-January. According to NRB sources, there is an increasing tendency of depositors to withdraw their deposits. “Those who made fixed deposits are not renewing their deposits,” said the source.
The bank has also stopped paying big institutional depositors including Rastriya Beema Sansthan and Citizen Investment Trust.
Source: ekantipur
According to NRB spokesperson Bhaskarmani Gyawali, banks and financial institutions (BFIs) cannot purchase assets of promoters as this is an issue connected with conflict of interests.
An NRB probe team assigned to probe the real status of the financial situation and governance of the development bank, found that the bank used the depositors’ money to buy five ropanies of land located at Kamaladi in the Capital owned by Agriculture Premura Holding, a key promoter of the bank.
Agriculture Premura Holding has a 13.07 percent stake in the development bank. “Purchasing promoters’ assets is against the Bank and Financial Institution Act. The Act bars BFIs from abetting cross-interest of promoters,” said Gyawali.
Gurkha Development Bank has already paid Rs 300 million to Premura Holding for the land valued at Rs 900 million severally, according to the central bank probe.
According to NRB sources, the timing of the purchase decision and resignation of Prabin Naulakha who represented Premura Holding on the bank’s board was the same. “It seems Naulakha resigned just for the sake of buying the land,” said the NRB official.
Naulakha admitted that there had been an agreement for purchasing the land. The process of purchasing the land began after a verbal agreement between Premura Holding and bank ex-chairman D.B. Bamjan, who has been recently reinstated amid political pressure, according to him.
“I heard that the purchase process went ahead following the decision of the bank’s board,” Naulakha said. “I am not clear about the board decision as I was absent at that time.”
A board member, however, to comment on the matter. “I can only say anything after seeing the document,” he added.
According to the NRB probe, the price of the land has fixed much higher than the actual market price. “The bank’s board has approved the purchase of the land which Premura Holding had purchased for Rs 300-350 million,” said the NRB source. “ It seems there is a big game of commission.”
Following the allegations of irregularities of Rs 130 million against Chairman Bamjan and others, the central bank initiated the probe in the bank. The NRB has already sought clarification from the bank’s directors asking why they should not be fined Rs 500,000 each. Earlier, the board members except for Bamjan and Nirmal Gurung had given verbal clarifications.
According to the NRB investigation, the bank’s deposit has continued to decline over the last few months after revelations of bad corporate governance. Its deposits have come down to Rs 5 billion as of mid-March from Rs 5.65 billion in mid-January. According to NRB sources, there is an increasing tendency of depositors to withdraw their deposits. “Those who made fixed deposits are not renewing their deposits,” said the source.
The bank has also stopped paying big institutional depositors including Rastriya Beema Sansthan and Citizen Investment Trust.
Source: ekantipur
