NA, EPF get back deposits in Nepal Development Bank

KATHMANDU, FEB 14 -

The liquidator of Nepal Develop-ment Bank (NDB) on Monday has made full repayment of the deposits of the Nepal Army (NA) and has decided to make partial repayment to the Employees Provident Fund (EPF).

“The Army Welfare Fund (AWF) received its total deposits of Rs 176.38 million including the interest generated until Dec 17, 2009, the day the court sent NDB into liquidation,” the NA confirmed in a press release. According NDB liquidator Narayan Bajaj, he has prepared a cheque for Rs 193.7 million to pay the EPF which will be delivered on Tuesday.

Bajaj decided to issue payment to the two big institutional depositors after the Patan Appellate Court directed it pay the recovered amount of Rs 370 million to them. The EPF will still need to receive Rs 130 million from NDB after this payment. 

According to Bajaj, the EPF has also demanded interest on its deposits. “We will first try to make full payment of the principal,” said Bajaj. “If some outstanding loans including inter-bank loans and non-banking assets are recovered, we will be in a position to make full repayment to the EPF.”

The EPF and the AWF were the two largest depositors in NDB, accounting for 45 percent and 27 percent of the total deposits respectively, when it was sent into liquidation in December 2009 by the Patan Appellate Court.

After the bank’s financial health deteriorated severely due to poor governance by its promoters, the central bank decided to recommend that it be liquidated. Since the liquidation process began, the liquidator has repaid almost all the bank’s small depositors. “There are still about 500 small depositors who are yet to get back their deposits worth Rs 2.5 million as they have remained out of contact,” said Bajaj.

As per the Bank and Financial Institution Act (BAFIA), individual savings depositors will be the first to get back their deposits if a bank or financial institution is liquidated. Fixed individual depositors come second followed by other depositors. Accordingly, the EPF and the AWF received their deposits after the individual depositors.

The two institutional depositors had earlier received Rs 11 million in total as part repayment of their deposits.

Source: Kantipur