KATHMANDU, SEP 19 - 2012
It has been one and half years since Gurkha Development Bank (NRB) was declared crisis-ridden, but the bank is still struggling to recover bad loans.
The central bank recently dispatched a strongly-worded letter to Gurkha, asking why it failed to recover 20 big loans and what it could do to recover the amount, according to a senior Gurkha official.
Those 20 loans (Rs 1.13 billion), most of them related to the real estate sector, account for two-thirds of the bank’s total bad loans (Rs 1.5 billion).
According to the bank’s internal assessment, it requires at least Rs 1 billion to turn healthy. “The central bank, a few days ago, asked for a viable plan to recover the chronic bad debts,” said the Gurkha official.
Among the loans the central bank has pointed out are those lent to Swayambhuraj Bajracharya, Raenna Asset Developer, Santoshi Rai International, Sony and Salima Developers, Darsandhunga Roda Uydog, Mondhum Housing and Investment and SN Developers.
Other bad loans of the bank include those going to Indeep Developers Private Limited, Sukla Trade, Lumbini Infrastructure, BKHP Construction Company, Muna Housing, Morang Model Residence, Janamukti Housing and Abdhul Kawadi. “I have created environment for the recovery of around Rs 350 million,” said Gurkha’s director Amod Domzan, who was removed from the post of managing director by the bank’s board on Monday. “Loanees including Muna Housing, Morang Model Residence, Janamukti Housing are in our contact and have committed to repay loans.”
Even Pancha Lal Maharjan, whose land was put up collateral to sanction loans to Abdul Kawadi, is also trying to claim back his land by repaying the loan amount, according to Domzan.
“If those 20 big loans—most of them connected with promoters—are recovered, the bank will be in a healthy condition,” said a senior NRB official. “But nobody heading the management made efforts to recover the loans.”
While declaring Gurkha crisis-ridden on March 25, 2011, the central bank had given it a six-month time to work for revival. The central bank had asked Gurkha to reduce its nonperforming loans to 5 percent.
MD Domzan ousted
A meeting of the Gurkha Development Bank board on Monday removed Managing Director Amod Domzan and decided appoint Raj Kumar Rai to the post. The troubled bank has sent Rai’s name to the Nepal Rastra Bank for approval, over which Domzan has written a note of descent. “Until the central bank decides, Chairman Prem Begha will work as executive chairman,” said a Gurkha source. However, as a central bank directive has barred a BFI chairman from holding executive post, there are doubts about whether NRB would allow Begha to function as executive chairman. According to a Gurkha source, Domzon has questioned Rai’s eligibility to hold the post of chief executive as he has ‘never worked in a BFI’. Rai is a chartered accountant.
Source: The Kathmandu Post
It has been one and half years since Gurkha Development Bank (NRB) was declared crisis-ridden, but the bank is still struggling to recover bad loans.
The central bank recently dispatched a strongly-worded letter to Gurkha, asking why it failed to recover 20 big loans and what it could do to recover the amount, according to a senior Gurkha official.
Those 20 loans (Rs 1.13 billion), most of them related to the real estate sector, account for two-thirds of the bank’s total bad loans (Rs 1.5 billion).
According to the bank’s internal assessment, it requires at least Rs 1 billion to turn healthy. “The central bank, a few days ago, asked for a viable plan to recover the chronic bad debts,” said the Gurkha official.
Among the loans the central bank has pointed out are those lent to Swayambhuraj Bajracharya, Raenna Asset Developer, Santoshi Rai International, Sony and Salima Developers, Darsandhunga Roda Uydog, Mondhum Housing and Investment and SN Developers.
Other bad loans of the bank include those going to Indeep Developers Private Limited, Sukla Trade, Lumbini Infrastructure, BKHP Construction Company, Muna Housing, Morang Model Residence, Janamukti Housing and Abdhul Kawadi. “I have created environment for the recovery of around Rs 350 million,” said Gurkha’s director Amod Domzan, who was removed from the post of managing director by the bank’s board on Monday. “Loanees including Muna Housing, Morang Model Residence, Janamukti Housing are in our contact and have committed to repay loans.”
Even Pancha Lal Maharjan, whose land was put up collateral to sanction loans to Abdul Kawadi, is also trying to claim back his land by repaying the loan amount, according to Domzan.
“If those 20 big loans—most of them connected with promoters—are recovered, the bank will be in a healthy condition,” said a senior NRB official. “But nobody heading the management made efforts to recover the loans.”
While declaring Gurkha crisis-ridden on March 25, 2011, the central bank had given it a six-month time to work for revival. The central bank had asked Gurkha to reduce its nonperforming loans to 5 percent.
MD Domzan ousted
A meeting of the Gurkha Development Bank board on Monday removed Managing Director Amod Domzan and decided appoint Raj Kumar Rai to the post. The troubled bank has sent Rai’s name to the Nepal Rastra Bank for approval, over which Domzan has written a note of descent. “Until the central bank decides, Chairman Prem Begha will work as executive chairman,” said a Gurkha source. However, as a central bank directive has barred a BFI chairman from holding executive post, there are doubts about whether NRB would allow Begha to function as executive chairman. According to a Gurkha source, Domzon has questioned Rai’s eligibility to hold the post of chief executive as he has ‘never worked in a BFI’. Rai is a chartered accountant.
Source: The Kathmandu Post
