Gurkha asks NRB for more time to submit capital plan

KATHMANDU, JUN 15 -

Crisis-ridden Gurkha Development Bank has asked the central bank for an indefinite extension of the deadline to submit its capital plan as its three key promoters are yet to agree on their next move. Nepal Rastra Bank (NRB) had given Gurkha until June 14 to submit its capital plan.

Gurkha has written to the central bank asking for more time as it said it was attempting to forge a consensus between its three key promoters—DB Bamjan, who is serving a jail term for banking fraud, Rakesh Adukiya and Nirmal Gurung. Bamjan has a 14 percent stake in Gurkha, Adukiya 13 percent and Gurung 6 percent.

Gurkha has called a meeting of the promoters on June 19 to conclude who should lead the bank. “We can submit the capital plan to NRB after the meet,” said Amod Domzone, managing director of Gurkha, adding that they were seeking a solution by ensuring a majority stake for one of the promoters while the other two would have to sell their shares to one of them.

According to Domzone, Adukiya and Gurung have expressed interest to acquire a majority stake in the bank. Adukiya has proposed to purchase the promoter shares at Rs 30 per share and acquire over 50 percent of the shares in the bank. He discussed his plan with Bomjon in prison on Thursday.

According to Adukiya, Bamjan agreed to cut his stake in the bank and allow Adukiya’s team to run the development bank. “My concern is that there should not be any environment for intervention from Bomjon in the bank in the future,” he said.

However, as they are yet to agree on the price of the shares, whether negotiations will yield results is not certain.

“As a consensus has been reached verbally, we have asked Bamjan to send his views on my proposal in writing to the Gurkha board,” said Adukiya.

Regarding Gurung’s interest to acquire a majority stake in the bank, Adukiya said that there can be a solution with one party holding a majority stake. However, he said that Gurung may not dare to acquire a majority stake as he presently holds only 6 percent of the shares.

According to the Gurkha management, the development bank requires around Rs 1 billon to recover its health.

Adukiya said that if an agreement was reached on allowing him to control a majority stake, he would go for issuing rights shares and finding strategic partners to increase the paid-up capital to the required level.

About a month ago, Gurkha’s CEO Krishna Kumar Bhattarai had resigned from his post after failing to bring the three major shareholders together to settle their differences and find a solution for the development bank.

Source: The Kathmandu Post