SAGAR GHIMIRE
Nepal Rastra Bank (NRB) has decided to send two troubled finance companies -- Himalaya Finance and Crystal Finance -- into liquidation.
The board meeting of the NRB held on Sunday decided to take the ´C´ class finance companies into liquidation process after the central regulatory bank concluded that the companies were no more in a position to be improved. “Since there was no possibility to rehabilitate these troubled institutions, we resorted to the last option of liquidation,” a high-level official of NRB told Republica, requesting anonymity.
Both the companies are based in Kathmandu.
NRB had announced Crystal Finance Ltd and Himalayan Finance Ltd as troubled institutions in mid-April 2011 and mid-July 2012, respectively, after their capital adequacy ratio and net worth, among other indicators, fell below the regulatory requirement.
With the NRB deciding to dissolve these two institutions, the total number of companies going into liquidation has reached five. NRB had already taken Nepal Bikas Bank, Samjhana Finance and United Development Bank into the liquidation process.
NRB will now approach the Patan Appellate Court to get the latter´s permission to liquidate the two institutions. If the court is convinced with the central bank´s demand, it will appoint separate liquidators to determine assets and liabilities of the institutions.
"We had given sufficient timeframe to these institutions to improve their financial health. As their financial condition worsened further, the decision to send them into liquidation was inevitable," the high-level official added.
The two finance companies went into crisis due to insider lending, over-exposure to the real estate sector, and embezzlement of the public deposit among other corporate governance problems. According to the due diligence audit report of Himalaya Finance conducted as per the directive of NRB, it had liabilities worth Rs 730 million while its total assets stood at Rs 180 million only.
Likewise, Crystal Finance Ltd was found extending loans worth around Rs 446 million to its board members, promoters, and their relatives, going against the existing banking rules and regulations.
Himalaya Bhakta Pradhananga, former chairman of Himalaya Finance Ltd, along with 167 accused of the finance company have already been prosecuted under the banking offense act with the claim amount of Rs 532.29 million. Similarly, banking fraud cases against Dibya Kumar Shrestha, former chairman of Chairman of Crystal Finance, along with 31 others, with combined claim amount of Rs 501 million, are pending at the Patan Appellate Court.
source: SAGAR GHIMIRE , republica, 5 nov 2014
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Nepal Rastra Bank (NRB) has decided to send two troubled finance companies -- Himalaya Finance and Crystal Finance -- into liquidation.
The board meeting of the NRB held on Sunday decided to take the ´C´ class finance companies into liquidation process after the central regulatory bank concluded that the companies were no more in a position to be improved. “Since there was no possibility to rehabilitate these troubled institutions, we resorted to the last option of liquidation,” a high-level official of NRB told Republica, requesting anonymity.
Both the companies are based in Kathmandu.
NRB had announced Crystal Finance Ltd and Himalayan Finance Ltd as troubled institutions in mid-April 2011 and mid-July 2012, respectively, after their capital adequacy ratio and net worth, among other indicators, fell below the regulatory requirement.
With the NRB deciding to dissolve these two institutions, the total number of companies going into liquidation has reached five. NRB had already taken Nepal Bikas Bank, Samjhana Finance and United Development Bank into the liquidation process.
NRB will now approach the Patan Appellate Court to get the latter´s permission to liquidate the two institutions. If the court is convinced with the central bank´s demand, it will appoint separate liquidators to determine assets and liabilities of the institutions.
"We had given sufficient timeframe to these institutions to improve their financial health. As their financial condition worsened further, the decision to send them into liquidation was inevitable," the high-level official added.
The two finance companies went into crisis due to insider lending, over-exposure to the real estate sector, and embezzlement of the public deposit among other corporate governance problems. According to the due diligence audit report of Himalaya Finance conducted as per the directive of NRB, it had liabilities worth Rs 730 million while its total assets stood at Rs 180 million only.
Likewise, Crystal Finance Ltd was found extending loans worth around Rs 446 million to its board members, promoters, and their relatives, going against the existing banking rules and regulations.
Himalaya Bhakta Pradhananga, former chairman of Himalaya Finance Ltd, along with 167 accused of the finance company have already been prosecuted under the banking offense act with the claim amount of Rs 532.29 million. Similarly, banking fraud cases against Dibya Kumar Shrestha, former chairman of Chairman of Crystal Finance, along with 31 others, with combined claim amount of Rs 501 million, are pending at the Patan Appellate Court.
source: SAGAR GHIMIRE , republica, 5 nov 2014
LINK
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