People´s Finance Executive playing hide and seek with the Police.

The central bank is seeking police action against People's Finance executive chairperson Chhabilal Bhusal, 

who is believed to be on the run from last two days. The central bank board this evening was forced to take

the decision after the finance company today suddenly sought Nepal Rastra Bank's permission to close 

daily transaction due to liquidity crunch. "Due to technical reasons, we have closed our daily transactions 

today," People's Finance chief manager Keshab Prasad Bhattarai told The Himalayan Times.

According to him, one of the technical reasons is liquidity crunch. Its cheques have been bounced 

lately forcing the company to close its daily transactions. "We will start operation after our executive chairman 

Bhusal ¿ who is on leave since last two days ¿ returns tomorrow," Bhattarai said, without elaborating how will 

the finance company manage to pay its clients from tomorrow. The Class C finance company established in
2049 BS was heavily exposed to land and real estate as its loan exposure to the sector is around 60 per cent, according 

to a source.

A team of central bank today went to the finance company's headquarter in Tripureshwor, Kathmandu to get the 

first hand information on its financial status. "The company ¿ that had distributed 7.5 per cent cash dividend from

the profits of last fiscal year ¿ has a liability of around Rs 900 million but it has only Rs 2.5 million cash with it," 

according to the primary report.

In the third quarter of the current fiscal year it has reported Rs 6.48 million profits. Its Non-Performing Loan has 

increased to 3.07 per cent from 2.48 per cent of previous quarter and 2.14 per cent in the same period of the 

last fiscal year, according to its unaudited report of the third quarter of current fiscal year. "Its CD ratio stood 

at 88.57 per cent." Established in 2049 BS the Class C financial institute has an authorised capital of Rs 1 billion 

divided into shares of Rs 100 each. It has the paid up capital of Rs 268.8 million. Of the total paid up capital 

51 per cent is owned by promoters and rest is issued to the public.

In the last three months the company's 50-unit of share changed hands through five transactions at the 

highest price of Rs 225 and lowest of Rs 209 per unit share. According to its unaudited results, its earning per 

share (EPS) stood at Rs 2.25.

So many finance institutes executives are bring sought after and yet the government is giving permission for new Finance 

Companies to be operated. Government is still giving permission for IPO. Is this making the general public aware or is it a total
fault from the government(NRB). Both are necessary.

Make Promoters Responsible!

Sensing the trend of promoters being irresponsible, parliamentarians today sought the way
to make them responsible even after they leave the financial institutions. "The proposed
amendment in Banks and Financial Institutions Act (Bafia) should have a clear provision that a
promoter should not be allowed to leave the financial institution without clearing liabilities,"
said committee member and Constituent Assembly member Hari Roka during the discussion
at Parliamentary Statutory Committee here today. In the past there has been a couple of i
ncidents, when a promoter has walked out without clearing liabilities.

"Compulsory consent of the banks and financial institutions should be introduced, if promoters
want to transfer their responsibilities to other promoters," he proposed, adding that personal
guarantee should be fixed according to the banks and financial institutions rule. He presented
the instances of Cosmic Air and Necon Air. "Promoters of both the airlines fled due to unclear
provision in the existing Act," he said, criticising the trend of making low level staff and member r
esponsible. "State should come hard against defaulters," he said. However, other members
of the committee including entrepreneur Diwakar Golchha and Ramesh Lekhak said that such
provision should not be introduced in the Bafia.

"The purposed amendment is more concerned with Company Act," Golchha said. Parliamentarians
also porposed to include base rate and split rate in the proposed amendment. The committee members
demanded to fix base rate of the interest. Base rate is the rate of interest used by individual commercial
banks as a basis for their lending rates. Currently, Nepal has fixed the interest rate through Monetary
Policy. However, central bank governor Dr Yubraj Khatiwada pledged to address the rate issues t
hrough Monetary Policy. However, committee members said that the interest rate could be revised
only twice a year. If interest rate increases in short term, the cost of fund will increase and investors will
be discouraged," other committee members said.

Former Samjhana Finance boss under Arrest

In yet another case of detention of a top-level banking executive involved in banking fraud, Police on Sunday arrested Shyam Bahadur Shrestha, former executive chairman of Samjhana Finance that is currently under the liquidation process. A team of Nepal Police's Central Investigation Bureau (CIB) arrested Shrestha from his residence at Golkupakha, Kathmandu. He has been charged with misappropriation of public deposits worth Rs 20 million. DIG Rajendra Singh Bhandari, chief of CIB, said Shrestha's arrest was a part of the massive hunt initiated to track down top BFI executives involved in banking fraud.

The Nepal Rastra Bank had asked the police in February to initiate legal action against Shrestha, immediate chief executive officer of the company Hem Bahadur Gurung and senior managers Saroj Bajracharya, Bijayamani Acharya, Prabin Kumar Khanal and Pawan Kumar Khanal as per the Banking Offense and Punishment Act. The central bank said these officials were involved in taking loans for themselves and their kin without putting up adequate collateral which affected the institution's financial health. The Due Diligence Audit (DDA) report of Samjhana revealed that its promoters cheated the regulator, shareholders, auditors and depositors by maintaining hidden accounts of deposits and credit for the last eight years. The hidden accounts were never shown during the company's regular auditing.

Sebon allows Online Report Submission to Companies

The Securities Board of Nepal (Sebon) on Tuesday launched a website www.sedfar.gov.np to allow listed
companies, merchant bankers, stockbrokers and other participants to submit online, their periodic financial
reports and other documents required by the Law. Sebon has said in a press release that companies
preparing for IPO could submit their documents online too. "Listed companies are required to get a username
and password to access the service," added the statement.

Sebon, the regulator of the country's capital market, has informed 12 banks and financial institutions (BFIs) about
the website in the first phase. The regulator said that the website would encourage punctual submission of
reports besides reducing the cost of submitting them. "Similarly, the process of submitting reports will be easier
and, errors in the submitted reports can be rectified quickly," said Sebon. "The Securities Data Management System
Project of Sebon developed the website with a grant assistance of the International Development Association
under the World Bank," added the statement.

IPO of Chilime Hydro Power Over Subscribed

Chilime Hydro Power has stated on Sunday that its Initial Public Offering to the public has been oversubscribed by 7 times, which seems highly positive response from public at the current situation of Nepse index and other IPO offerings.