KATHMANDU, FEB 06 - 2012
Three investors, including a foreign financial institution, have shown interest in investing in Gurkha Development Bank (GDB). The bank has been declared “problematic” by the Nepal Rastra Bank (NRB).
According to a source at the bank, a Bangladeshi financial institution, a regional level development bank in Nepal and a group of Nepali investors have shown willingness to make investment in the GDB.
“The bank is holding talks with all the three parties,” said Krishna Prasad Bhattarai, the chief executive officer of the GDB. “However, this is the first phase of discussions.”
During the first round of discussions, the Bangladeshi financial institution has shown interest in investing as a foreign joint venture partner. Similarly, a national level development bank is keen to go into merger in order to get the status of a national level development bank. On the other hand, an investment group from Nepal wants to take over the management by buying at least 51 percent of the bank’s stake.
However, all the three parties have said they will invest on the condition that the central bank redeem the bank of its “problematic” status.
“Apart from being in a problematic state, it is also difficult to bring together all the promoters at one place,” Bhattarai said. “Therefore, taking a decision will take some more time.”
NRB had put forward three conditions with the management of the bank to lift the action—recovery of defaulted loans from Abdul Kawadi, selling the JSB Financial Tower and additional capital injection.
An NRB official said the bank is in the process of recovering the loans and that the regulator will lift the action if able investors show willingness to inject capital in it.
Bhattarai said the bank has already acquired land that is in the name of Abdul Kawadi and is planning to sell it through auction. The land is likely to fetch an estimated Rs 190 million.
Likewise, the bank has signed an agreement with Centriyo Global Incorporated, a Hong Kong-based Latin American company, to sell the JSB Tower for US$ 10 million. The NRB approved the agreement, and as the first instalment, the bank has already received US$ 100,000, while the rest is expected by April 7.
According to the bank, the sale of the property will solve the bank’s liquidity problem. “After the bank was declared problematic, some of our employees have resigned and we are not allowed to hire additional manpower,” Bhattarai said. “This has seriously affected our loan recovery process.”
After being declared “problematic,” the GDB has returned deposits worth about Rs 1.9 billion, while it is yet to return Rs 2.71 billion more. It has a total lending of Rs 3.7 billion.
According to an NRB source, the possibility of loans—worth Rs 600 million given under the direction of the bank’s former Chairman DB Bomjon—being recovered is very slim.
“The collateral of the lending worth Rs 600 to Rs 800 million is very poor,” said the NRB source. “The amount was lent with a wrong intention.” According to the source, most of the plots of land kept as collateral are located on river banks.
Three investors, including a foreign financial institution, have shown interest in investing in Gurkha Development Bank (GDB). The bank has been declared “problematic” by the Nepal Rastra Bank (NRB).
According to a source at the bank, a Bangladeshi financial institution, a regional level development bank in Nepal and a group of Nepali investors have shown willingness to make investment in the GDB.
“The bank is holding talks with all the three parties,” said Krishna Prasad Bhattarai, the chief executive officer of the GDB. “However, this is the first phase of discussions.”
During the first round of discussions, the Bangladeshi financial institution has shown interest in investing as a foreign joint venture partner. Similarly, a national level development bank is keen to go into merger in order to get the status of a national level development bank. On the other hand, an investment group from Nepal wants to take over the management by buying at least 51 percent of the bank’s stake.
However, all the three parties have said they will invest on the condition that the central bank redeem the bank of its “problematic” status.
“Apart from being in a problematic state, it is also difficult to bring together all the promoters at one place,” Bhattarai said. “Therefore, taking a decision will take some more time.”
NRB had put forward three conditions with the management of the bank to lift the action—recovery of defaulted loans from Abdul Kawadi, selling the JSB Financial Tower and additional capital injection.
An NRB official said the bank is in the process of recovering the loans and that the regulator will lift the action if able investors show willingness to inject capital in it.
Bhattarai said the bank has already acquired land that is in the name of Abdul Kawadi and is planning to sell it through auction. The land is likely to fetch an estimated Rs 190 million.
Likewise, the bank has signed an agreement with Centriyo Global Incorporated, a Hong Kong-based Latin American company, to sell the JSB Tower for US$ 10 million. The NRB approved the agreement, and as the first instalment, the bank has already received US$ 100,000, while the rest is expected by April 7.
According to the bank, the sale of the property will solve the bank’s liquidity problem. “After the bank was declared problematic, some of our employees have resigned and we are not allowed to hire additional manpower,” Bhattarai said. “This has seriously affected our loan recovery process.”
After being declared “problematic,” the GDB has returned deposits worth about Rs 1.9 billion, while it is yet to return Rs 2.71 billion more. It has a total lending of Rs 3.7 billion.
According to an NRB source, the possibility of loans—worth Rs 600 million given under the direction of the bank’s former Chairman DB Bomjon—being recovered is very slim.
“The collateral of the lending worth Rs 600 to Rs 800 million is very poor,” said the NRB source. “The amount was lent with a wrong intention.” According to the source, most of the plots of land kept as collateral are located on river banks.
Source: Kantipur
No comments:
Post a Comment