Nepal Rastra Bank blocks General Finance officials accounts

KATHMANDU, JUL 11 -

Nepal Rastra Bank (NRB) on Tuesday blocked the accounts of the entire board members, top management and a few clients of General Finance Limited (GFL).

The NRB dispatched letters to all banks and financial institutions (BFIs) asking them to freeze the deposit accounts and lockers of 13 individuals and firms. It also asked the banks to submit details of the accounts to NRB at the earliest.

The 13 individuals include GFL Chairman Upendra Narayan Shrestha, Directors Kishor Kumar Maharjan, Krishna Prasad Shrestha, Kapoor Prasad Vaijoo, Bipin Timla, Mahendra Prasad Shrestha and Sidhi Das Sayami, CEO Prakash Kumar Dhungana and General Manager Raju Kumar Pradhan. The central bank has also asked the BFIs to block the accounts of Saharin Varieties Goods Suppliers and its proprietor Sachin K Sunuwar and Global Multi-purpose International and its director Bikas Poudel.

The NRB decision follows an inspection of the finance company. A team of the NRB had found irregularities being carried out by the top management of the GFL. After initial investigations, NRB official found that the top management of the company were involved in issuing good-for-payment cheques of various deposit accounts without having sufficient balance. “They issued good-for-payment cheque to different account holders without sufficient balance by charging a handsome commission,” said a senior official at the NRB. “Such cheques are used for monetary guarantee in different transactions like bidding and others.”

Police on Sunday arrested GM Pradhan on charges of misappropriating Rs 78.25 million by misusing his position at the finance company. According to the police, Pradhan was arrested after the board members of the finance company registered a complaint with the police. They accused Pradhan of using fake cheques and the stamp of the finance company. He had issued two good-for-payment cheques worth Rs 5.09 million, payable from the account of Sunuwar, the proprietor of Shaharin Verities Food Suppliers, although his account did not have enough balance.

“The central bank is also preparing a letter to be sent to the Securities Board of Nepal and the Department of Land Revenue and Management to freeze Pradhan’s shares and land transactions,” said an NRB official.

According to NRB officials, as of now, the only issue that has surfaced is the fake good-for-payment cheques, but they suspect other shady deals too.

The NRB team is also probing transactions of the finance company. “Based on the off-site reporting from General Finance, the financial situation of the company is ok,” said another NRB official. “But, the ongoing on-site inspection will reveal the degree of irregularities and the status of financial health of this finance company.”

As per the third quarter report of the company, its capital adequacy ratio is 15.12 percent, non-performing loan 2.98 percent, credit to deposit ratio 86.98 percent and total proportion of real estate and housing loan of 36.19 percent.

However, findings from the preliminary investigations show that the board members are not involved in fraudulent activities, according to an NRB source. “But we will open their accounts only after a complete investigation,” said a senior NRB official.

Source: The Kathmandu Post