The financial health of Gurkha Bikas Bank seems to have worsened as the troubled financial institution’s portfolio contains 84 per cent bad loans despite central bank’s efforts to revive it since the past 16 months.
Of the total outstanding loans worth Rs 1.7 billion floated by the development bank, loans worth Rs 1.44 billion are not paying any interest and the repayment is also unlikely, according to the audited balance sheet of fiscal year 2012-13. The balance sheets of the last three fiscal years approved by the annual general meeting (AGM) of the bank held on March 30 reveal the class ‘B’ institution’s deteriorating state. The non-performing loans of the bank stood at 78.71 per cent in fiscal 2011-12 and 54.51 per cent in fiscal 2010-11.
Although the development bank has been able to register a profit of Rs 57 million for the standalone year of 2012-13, its retained loss stood at Rs 1.76 billion by the end of last fiscal year.
The development bank’s balance sheet was showing a mere 1.07 per cent of non-performing assets till fiscal year 2009-10. Such bad loans shot up to 54.51 per cent on next year’s audited balance sheet due to troubles at the seemingly well functioning financial institution following the revelations of the embezzlements of funds by the then directors and management in January 2011.
“The numbers were not encouraging till the end of last fiscal, but as of present, we have been able to recover more loans, which have slightly improved the financial by the third quarter of the current fiscal year,” pointed out a Nepal Rastra Bank (NRB) official looking after the management of the troubled institution. NRB’s team had taken reins of the troubled development bank in January 2013 to save it from potential collapse.
According to Gurkha Bikas Bank’s balance sheet, the management has recovered loans worth Rs 312.8 million, which were provisioned for possible loss last fiscal year.
“We are hopeful that the bank can get back to its feet if the collateral or some of the large defaulters can be auctioned off,” said the official.
Despite the shaky finances, the bank has been able to manage enough cash flow from the remaining good loans to handle withdrawals. The bank still houses Rs 1.55 billion, with Rs 140 million belonging to the public, till the end of the second quarter of the current fiscal year.
“A number of groups have shown interest in taking control of the bank by injecting capital, but it’s up to NRB to decide on the matter,”informed the official.
Allegedly some ex-Gurkha soldiers, who are the promoters of the bank, have called on other Gurkha soldiers to invest to save the financial institution that bears their community’s name.
Back in January 2011, the involvement of the bank’s directors, promoters and management in large scale financial embezzlement and insider lending was revealed. Along with the revelation, the directors’ dispute led NRB to declare the bank ‘troubled’ in March 2011.
Less than a month ago, Patan Appellate Court convicted the then executive chairman and main accused of the misappropriation of the fund — DB Bamjan, another director — Dhan Prasad Rai, four debtors, and a valuator for unlawful lending and borrowing from the development bank.
source: the himalayan times,18 april 2014
LINK
Of the total outstanding loans worth Rs 1.7 billion floated by the development bank, loans worth Rs 1.44 billion are not paying any interest and the repayment is also unlikely, according to the audited balance sheet of fiscal year 2012-13. The balance sheets of the last three fiscal years approved by the annual general meeting (AGM) of the bank held on March 30 reveal the class ‘B’ institution’s deteriorating state. The non-performing loans of the bank stood at 78.71 per cent in fiscal 2011-12 and 54.51 per cent in fiscal 2010-11.
Although the development bank has been able to register a profit of Rs 57 million for the standalone year of 2012-13, its retained loss stood at Rs 1.76 billion by the end of last fiscal year.
The development bank’s balance sheet was showing a mere 1.07 per cent of non-performing assets till fiscal year 2009-10. Such bad loans shot up to 54.51 per cent on next year’s audited balance sheet due to troubles at the seemingly well functioning financial institution following the revelations of the embezzlements of funds by the then directors and management in January 2011.
“The numbers were not encouraging till the end of last fiscal, but as of present, we have been able to recover more loans, which have slightly improved the financial by the third quarter of the current fiscal year,” pointed out a Nepal Rastra Bank (NRB) official looking after the management of the troubled institution. NRB’s team had taken reins of the troubled development bank in January 2013 to save it from potential collapse.
According to Gurkha Bikas Bank’s balance sheet, the management has recovered loans worth Rs 312.8 million, which were provisioned for possible loss last fiscal year.
“We are hopeful that the bank can get back to its feet if the collateral or some of the large defaulters can be auctioned off,” said the official.
Despite the shaky finances, the bank has been able to manage enough cash flow from the remaining good loans to handle withdrawals. The bank still houses Rs 1.55 billion, with Rs 140 million belonging to the public, till the end of the second quarter of the current fiscal year.
“A number of groups have shown interest in taking control of the bank by injecting capital, but it’s up to NRB to decide on the matter,”informed the official.
Allegedly some ex-Gurkha soldiers, who are the promoters of the bank, have called on other Gurkha soldiers to invest to save the financial institution that bears their community’s name.
Back in January 2011, the involvement of the bank’s directors, promoters and management in large scale financial embezzlement and insider lending was revealed. Along with the revelation, the directors’ dispute led NRB to declare the bank ‘troubled’ in March 2011.
Less than a month ago, Patan Appellate Court convicted the then executive chairman and main accused of the misappropriation of the fund — DB Bamjan, another director — Dhan Prasad Rai, four debtors, and a valuator for unlawful lending and borrowing from the development bank.
source: the himalayan times,18 april 2014
LINK
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