Himalayan Bank, BoK told to deposit guarantee amount

KATHMANDU, JAN 22 -

Acting on a decision of the Appellate Court Patan, Nepal Rastra Bank (NRB) has told Himalayan Bank and the Bank of Kathmandu to deposit a sum equivalent to the counter guarantee they have provided to the Chinese contractor which was fired for non-performance by the Melamchi Water Supply Project.

The two banks have also been told to keep one third of the amount in reserves as contingent strategy so that even if they have to maintain the provisioning of counter guarantee amount, their net worth would not be affected.

Millions stolen from HBL through debit card fraud

KATHMANDU, JAN 04 - 2012

Millions of rupees have been stolen from the accounts of depositors at Himalayan Bank Limited (HBL) through fraudulent use of debit cards . The bank has blocked all operations of its debit cards for the time being after the thefts were revealed.

HBL CEO Ashoke Rana said that debit card transactions had been blocked to secure depositors from such unauthorised activities by upgrading the entire

security system.  According to him, the money was withdrawn last week from New Delhi. “We have initiated an investigation after an accountholder complained,” added Rana.

A director of the bank said the unauthorised withdrawal amounts to less than Rs 4 million. The bank has suspected the hand of a fugitive former employee in the debit card fraud.  He added that HBL debit cards could be unusable for the next two weeks.

The central bank has also said that they had been informed about the fraud verbally. “We have asked HBL to provide details of the incident,” said Nepal Rastra Bank spokesperson Bhaskarmani Gnawali.

The bank said that it was now seeking to improve its security system by introducing Payment Card Industry Data Security Standard (PCI DSS) which will block any hacking attempt on bank accounts.

The PCI DSS is a proprietary information security standard for organizations that handle cardholder information for major debit, credit, prepaid, e-purse and POS cards. According HBL CEO Rana, the central bank has also directed banks to go for such a system.

Meanwhile, in a notice published on Thursday, HBL has asked its debit card holders to contact their respective branches to replace the existing pin mailer with a new one for SCT and Master Debit Cards.

Source: The Kathmandu Post

Banks cautious about business with Chinese companies

KATHMANDU, DEC 02 - 2012

Commercial banks are adopting a cautious approach while doing business with Chinese construction companies after two banks risked losing around Rs 1.30 billion for giving counter guarantee to a Chinese bank that had given guarantee to the Chinese contractor involved in Melamchi Drinking Water Project.

After the China Construction Bank refused to release the guarantee amount citing the court order, two Nepali counter guarantors—Himalayan Bank Limited (HBL) and Bank of Kathmandu (BoK)—are in a big trouble.

A meeting of the Nepal Bankers’ Association (NBA) on Friday concluded that doing business with Chinese contractors is risky and asked all member banks to adopt caution while giving counter guarantee.

A majority of banks also agreed not to do business with the China Construction Bank, according to a NBA source.

“There will not be any transactions with the China Construction Bank henceforth,” said HBL CEO Ashok Rana, who is also the president of NBA. “We will have to be careful if a similar problem arises in other projects, in which Chinese contractors are involved.”

China Railway 15 Bureau Group, with which the Melamchi project terminated the contract for bad performance, has filed the case in the Chinese court arguing it would not pay the guarantee amount as it had to give up the job due to bad work environment in the project site and Nepal.

The two banks have given counter guarantee to the Chinese bank for performance security of $6.62 million and guarantee for advance payment of $6.62 million and 1.4 million euro (Rs 1.3 billion).

As per existing mechanism, the Chinese bank should have released that amount to the Nepali banks, which would have been paid to the Melamchi Project.

With the Chinese bank refusing to release the guarantee amount, the two Nepali banks are facing trouble after the Melamchi

Water Supply Development Board asked them to release the guarantee amount.

“We are holding discussion with all relevant

parties, including the Melamchi Board and Nepal Rastra Bank, after the Chinese bank refused to release the guarantee amount, citing court’s order,” said Ajaya Sharestha, CEO of BoK. “We are

also exploring legal options on what can be done in

such cases.”

He said the process of giving counter guarantee is similar internationally. “This is a rare case and has alarmed us,” he added.

As work on many other projects in which Chinese contractors are involved has not been encouraging, Nepali banks are suspicious about the possibility of emergence of similar situation in future. That’s why they said they had to take such a decision.

Melamchi Board of Krishna Acharya said they have asked the two Nepali banks to pay the guar-

antee amount, but also acknowledged the banks’ problem.

“That’s why we have also sent a letter to the Nepal Rastra Bank to help recover the amount,’ said Acharya.

Source: The kathmandu Post

HBL employee found involved in Rs 56.7m fraud

An employee of the Himalayan Bank Limited (HBL), Anil Bhakta Suwal, has been found involved in fraud totalling 

Rs 56.7 million while settling Visa and MasterCard accounts receivable.

HBL Chief Executive Officer Ashoke Rana confirmed the fraud. "He (Suwal) was found involved in depositing the 

received amount in his own account, which instead should have been deposited in the bank's account," Rana said.

HBL has suspended Suwal and registered an FIR with the police on Saturday. The police also confirmed the registration

of the FIR. Deputy Superintendent of Police Arun BC at Metropolitan Police Range, Hanumandhoka, said the police are searching for Suwal.

A board meeting of the bank on Sunday decided to recover the lost amount from Suwal and initiate a legal action 

against him. "We have already frozen property owned by Suwal's family," said Rana. According Rana, Suwal's family

 has agreed to pay the money equal to the amount of the fraud committed within the next 30 days. He, however, assured 

that Suwal's act has not caused any loss to the bank's depositors.

In a press release, Himalayan Bank Employees Union said Suwal had been involved in the fraudulent activity since 2008. Saying that the fraud was discovered on September 14, the union expressed displeasure over the bank management not disseminating the information. The union has demanded that the fraud amount be recovered along with fine.

Visa and MasterCard are renowned companies that enable payment through cards worldwide. When a foreigner visits 

Nepal, they make payment to hotels and shopping malls through their credit cards. The hotels and shopping malls 

concerned make claims to local banks engaged in the business and the banks get the reimbursement of such payment 

from Visa and MasterCard.

The Nepal Rastra Bank (NRB) has also expressed concern over the matter. A NRB official said an inspection team

 assigned to conduct a field study of HBL has also been told to look into the fraud in detail. "The incident shows

 weakness in the internal control system," said the NRB official. "Internal and external audit should have found out 

the missing amount if the fraud had been committed for a long."

source:ekantipur