NSMF resumes services

Thu, May 12, 2011 12:00 AM on Others,
KATHMANDU, May 12:
Nepal Share Market Finance (NSMF) that had closed down services from Thursday after the central bank initiated action against its former executive chairman resumed operations on Wednesday.

The company said it paid Rs 2.2 million to its depositors, who preferred to withdraw their savings, and also recovered loan of Rs 30 million on the day. NRB official said it had received no complaint regarding payment from depositors.

The central bank on Tuesday had instructed NSMF to resume services instantly and make payment up to Rs 200,000 per individual depositors, if they preferred to withdraw their savings.

However, Gorkha Development Bank (GDB), which was declared a troubled bank a month ago, paid no heed to the similar instruction of the central bank issued on Tuesday. GDB had closed its customer services after two days of being declared a troubled bank, particularly after customers rushed for withdrawal.

NRB officials said they would take non-compliance by the bank to its instructions seriously.

"If they did not comply with our instructions, we will punish the office-bearers," said an official. In extreme case, he added that the central bank can go to the extent of liquidation of the bank.

Meanwhile, NRB has found involvement of high-level officials of Citizens Investment Trust (CIT) involved in irregularity while depositing its money in NSMF.

"Our investigations have showed that CIT had agreed on interest payment on annual basis, instead of quarterly basis, as we stipulated. This has caused loss in interest earning to the institution," said a source.

NRB has estimated interest loss of around Rs 120,000 a year. Officials of the central bank suspect that CIT officials might be involved in such irregularities in deposits that it is maintaining in other BFIs as well.

Earlier, NRB had found former chief executive of NSMF, Yogendra Shrestha, of personally using the deposits worth Rs 190 million that CIT maintained in the company.

Source: Republica