BFIs allowed to sell assets of errant officials

KATHMANDU, JUN 10 -

Nepal Rastra Bank (NRB) has allowed banks and financial institutions (BFIs) to sell the assets of their officials involved in banking fraud which have been frozen by the central bank to recover loans issued to them.

Promoters of BFIs are forbidden from borrowing from their own companies, and they usually take loans from other BFIs by putting up their shares, land and other assets as collateral. With BFIs which have issued loans to them unable to recover their investments as their assets have been frozen, the central bank on Monday decided to release the frozen assets for loan recovery.

“If the amount received from the sale of assets is higher than the actual liabilities of the loanee, the BFI concerned should deposit the surplus amount in the account of the central bank,” said a senior NRB official. The amount deposited in the central bank’s account will be used to repay the depositors of BFIs whose officials’ assets have been frozen. According to NRB officials, the move was taken to ensure that the non-performing loans of BFIs do not increase for not being able to sell off the assets of those involved in banking fraud for recovery purposes.

The board has also delegated authority to the governor to release the collateral at the request of BFIs. Earlier, only the central bank’s board could decide to release frozen assets. NRB has frozen the bank accounts, lockers and other movable and immovable assets of more than two dozen BFI officials including those of Nepal Development Bank, Samjhana Finance, United Development Bank, Gurkha Development Bank and Share Market and Finance.

Some of the BFI officials whose assets have been frozen are former patron of Nepal Development Bank Uttam Pun and other bank officials, Samjhana’s former executive chairman Shyam Bahadur Shrestha, former chief executive officer Hem Bahadur Gurung and other officials.

Likewise, the assets of United’s former executive chairman Rabindra Bahadur Singh and director Radha Krishna Amatya as well as executive chairman of Nepal Share Market and Finance Yogendra Prasad Shrestha have been frozen. The assets of former executive chairman and other directors of Gurkha have also been frozen. “If they have taken loans from any BFI by pledging their shares and other assets, the BFI concerned can now auction off their frozen collateral for recovery purposes,” said the NRB official.

Other bank officials who have also come under the police net include Samjhana’s Shrestha, Gurkha’s DB Bamjan, United’s Singh and Amatya.

Posted on: 2011-06-10 08:42

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