Nepal Rastra Bank (NRB) Thursday said shareholders of the troubled Nepal Development Bank (NDB), who recently deposited money to subscribe NDB´s rights issues would get their money back. However, it failed to console investors and depositors about the fate of their ordinary share investments and deposits in the bank.
"The money put on rights shares is still with NIDC Capital Markets, the issue manager, and will be excluded from the liquidation process," NRB Executive Director Gopal Kafle said . He told myrepublica.com that the central bank has already instructed the issue manager to keep the money as it is.
This will safeguarded some Rs 80 million of NDB´s shareholders money.
NDB had announced rights issues in the ratio of 1:1 to ordinary shareholders after the central bank asked it to raise its capital base to improve its deteriorating financial health.
Irked investors who picketed the central bank Thursday charged the NRB with not protecting their interests. Mainly they blamed the central bank for giving a nod to the the rights issue even when it was well aware of its turbulent financial situation.
In defense, NRB Governor Deependra Bahadur Kshetry said the NRB had given its consent because the revival of the bank´s financial health relied on reinjection of capital.
In another dramatic act, the NDB management refused to receive the central bank´s letter, asking the management to justify why the NRB shouldn´t initiate the liquidation process by filing a case at the Appellate Court in Patan within 15 days. The NRB had faxed the letter and also sent its staff in person.
Following the management´s refusal to take the letter, the central bank sent a letter through a courier on Thursday.
"We will seek measures for further action if they continue to reject the letter," said Kshetry.
Kshetry also revealed that the central bank has decided to slap a penalty of Rs 200,000 on NDB Chairman Ambar Gurung and Rs 100,000 each on its board members Dr Kiran Joshi and Lawa Raj Joshi, for serving in similar positions in Nepal Cooperative Ltd--a subsidiary of NDB. Their act flouted the Nepal Bank and Financial Institution Act, 2063 (BAFIA). NRB has also sought clarification over the violation of the Act within 15 days.
Depositors of NDB also met Kshetry and other senior NRB officials on Thursday and requested the top NRB brass to protect their savings.
The victims also placed demands such as the immediate return of their deposits, and stern action against the bank´s promoters and defaulters who pushed the bank into its current state, and the freezing of all of assets of the promoters, among others.
In reply to their queries over the fate of their savings, Governor Kshetry said he would not be able to say anything until the liquidator gave its final assessment report.
So far, the NRB has taken control of Rs 50.2 million worth of NDB´s assets in Pokhara. It is still assessing the value of assets seized in Kathmandu.
The NRB had decided to send the long-troubled NDB into liquidation on Tuesday, after its five-year-long efforts to revive the bank proved futile. The decision, the first of its kind in Nepal,sent shockwaves among shareholders and depositors. General people hold more than Rs 100 million worth of shares of the bank. The bank had deposits of more than Rs 720 million.
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