NSM SCAM: More of Shrestha’s offences come to light
Fri, May 27, 2011 12:00 AM on Others,
KATHMANDU, MAY 27 -
Wrongdoings of Yongendra Prasad Shrestha, former executive chairman of Nepal Share Market and Finance (NSM), are coming to light one after another.
Shrestha, who figures in the most wanted list of the Police, has been found to have misappropriated around Rs 650 million without maintaining accounts, according to the details provided by NSM to the Nepal Rastra Bank (NRB).
Earlier, an NRB investigation had found that Shrestha used Rastriya Beema Sansthan (RBS)’s fixed deposit of Rs 200 million for purchasing rights shares. Now, it has also been revealed that Shrestha did not maintain accounts of Rs 160 million of Citizens Investment Trust (CIT) and Rs 40 million of the Nepal Army, among others.
Issuing a direction to his subordinates, Shrestha had asked them to renew the fixed deposit of RBS in paper and use the amount for purchasing rights shares.
The NRB investigation has already revealed that he had created fake loans worth Rs 1.57 billion to finance rights shares for him and his kin. His family holds a 40 percent stake in NSM. The company was planning to upgrade itself into a commercial bank and that it has already increased its capital above Rs 2 billion.
Banks and financial institutions that made inter-bank lending to NSM are Shrestha’s other victims. They have lent around Rs 700 million to NSM which may be at the risk.
According to details provided by NSM to the central bank, about a dozen banks, including Janata, Machhapuchhre, Rastriya Banijya Bank, Century, Mega and Kist among others, have lent to NSM. Of the total inter-bank loan, NSM has not maintained accounts of loans worth Rs 170 million.
Anil Shah, chief executive officer of Mega Bank, said his bank has lent Rs 50 million a month ago. Mega is confident that NSM will be able to return back loan as its asset size is bigger than its liabilities, he said.
Bankers say they will have to maintain provisioning of loans that went to NSM this year. KIST CEO Kamal Gyawali said his bank has provided Rs 13 million to NSM and he believes that he loan will be recovered sooner or later.
According to the NRB investigation, NSM provided loans worth Rs 200 million to its promoters in violation of the Bank and Financial Institution Act. The central bank directive says such loan is deductible from the capital fund of the bank or financial institution concerned. After the implementation of this provision, the company’s capital fund came down to 4 percent against the requirement of 11 percent. The central bank has already directed it to make provisioning of Rs 1.72 billion against the fake lending orchestrated by Shrestha.
With the revelation of misappropriation by Shrestha on a large scale, the central bank has directed NSM to carry out its independent due diligent audit (DDA). “Only after the DDA we can confirm whether the company will survive,” said a senior NRB official.
The central bank implemented prompt corrective action (PCA) on NSM in the second week of May for its failure to maintain adequate capital fund. Under PCA, the company has been barred from collecting deposits and making lending. It also cannot purchase additional fixed assets and its directors and staff will not get incentives and benefits for leaving the institution. The central bank has also banned NSM from adding more staff, promoting existing staff and increasing their salary.
NRB has already told the government to punish Shrestha as per the Banking offense Act and the Police is after him. The central bank has already frozen Shrestha and his family members’ bank accounts and lockers. Shrestha’s passport has also been seized.
Despite these problems, the company has been returning deposits every day on a small scale. The central bank has directed NSM not to return individual deposits exceeding Rs 200,000 with a view to protecting small depositors.
As per the notice issued by NSM a few days ago, it has deposits worth Rs 3.25 billion of common people and Rs 2.75 billion of loans which can be recovered. It also claimed that Rs 4.55 billion can be raised through the sale of assets belonging to Shrestha and his family and the recovery of loans.
As of May 24, it has returned around Rs 100 million to depositors and recovered loans worth around Rs 90 million.
Source: Kantipur
Wrongdoings of Yongendra Prasad Shrestha, former executive chairman of Nepal Share Market and Finance (NSM), are coming to light one after another.
Shrestha, who figures in the most wanted list of the Police, has been found to have misappropriated around Rs 650 million without maintaining accounts, according to the details provided by NSM to the Nepal Rastra Bank (NRB).
Earlier, an NRB investigation had found that Shrestha used Rastriya Beema Sansthan (RBS)’s fixed deposit of Rs 200 million for purchasing rights shares. Now, it has also been revealed that Shrestha did not maintain accounts of Rs 160 million of Citizens Investment Trust (CIT) and Rs 40 million of the Nepal Army, among others.
Issuing a direction to his subordinates, Shrestha had asked them to renew the fixed deposit of RBS in paper and use the amount for purchasing rights shares.
The NRB investigation has already revealed that he had created fake loans worth Rs 1.57 billion to finance rights shares for him and his kin. His family holds a 40 percent stake in NSM. The company was planning to upgrade itself into a commercial bank and that it has already increased its capital above Rs 2 billion.
Banks and financial institutions that made inter-bank lending to NSM are Shrestha’s other victims. They have lent around Rs 700 million to NSM which may be at the risk.
According to details provided by NSM to the central bank, about a dozen banks, including Janata, Machhapuchhre, Rastriya Banijya Bank, Century, Mega and Kist among others, have lent to NSM. Of the total inter-bank loan, NSM has not maintained accounts of loans worth Rs 170 million.
Anil Shah, chief executive officer of Mega Bank, said his bank has lent Rs 50 million a month ago. Mega is confident that NSM will be able to return back loan as its asset size is bigger than its liabilities, he said.
Bankers say they will have to maintain provisioning of loans that went to NSM this year. KIST CEO Kamal Gyawali said his bank has provided Rs 13 million to NSM and he believes that he loan will be recovered sooner or later.
According to the NRB investigation, NSM provided loans worth Rs 200 million to its promoters in violation of the Bank and Financial Institution Act. The central bank directive says such loan is deductible from the capital fund of the bank or financial institution concerned. After the implementation of this provision, the company’s capital fund came down to 4 percent against the requirement of 11 percent. The central bank has already directed it to make provisioning of Rs 1.72 billion against the fake lending orchestrated by Shrestha.
With the revelation of misappropriation by Shrestha on a large scale, the central bank has directed NSM to carry out its independent due diligent audit (DDA). “Only after the DDA we can confirm whether the company will survive,” said a senior NRB official.
The central bank implemented prompt corrective action (PCA) on NSM in the second week of May for its failure to maintain adequate capital fund. Under PCA, the company has been barred from collecting deposits and making lending. It also cannot purchase additional fixed assets and its directors and staff will not get incentives and benefits for leaving the institution. The central bank has also banned NSM from adding more staff, promoting existing staff and increasing their salary.
NRB has already told the government to punish Shrestha as per the Banking offense Act and the Police is after him. The central bank has already frozen Shrestha and his family members’ bank accounts and lockers. Shrestha’s passport has also been seized.
Despite these problems, the company has been returning deposits every day on a small scale. The central bank has directed NSM not to return individual deposits exceeding Rs 200,000 with a view to protecting small depositors.
As per the notice issued by NSM a few days ago, it has deposits worth Rs 3.25 billion of common people and Rs 2.75 billion of loans which can be recovered. It also claimed that Rs 4.55 billion can be raised through the sale of assets belonging to Shrestha and his family and the recovery of loans.
As of May 24, it has returned around Rs 100 million to depositors and recovered loans worth around Rs 90 million.
Source: Kantipur
