KATHMANDU, JAN 31 - Chairman and Managing Director of Public Development Bank (PDB) Kunj Bihari Kayal resigned after he was implicated in a bank fraud case.

Following his resignation, PDB board meeting on Friday appointed Babulal Agrawal as officiating chairman and managing director of the bank.

Likewise, Indra Raj Humagain, chief executive officer of Infrastructure Development Bank Limited (IDBL) is under pressure to quit in another fraud case interconnected with PDB one, according to a promoter of IDBL.

With the PDB withdrawal soaring, Agrawal said he is concentrating on managing deposits after news about the fraud case broke out.

On a normal day, PDB's daily withdrawal used to be Rs. 15 million.

However, the bank saw the withdrawal of Rs. 100 million in three days, according to PDB.

Badri Bikram Thapa, PDB company secretary, said the bank can't withstand the same amount of withdrawal from Sunday onwards.

Nepal Rastra Bank (NRB) has asked police to investigate Kayal and Humagain after the central bank found them violating the existing banking norms.

NRB's investigation showed Kayal and his family received the loan of Rs. 15 million on different dates from IDBL by depositing his cheques, although he had no money in his account.

On the other hand, IDBL chief Humagain should have sent those cheques to the collection centre to confirm whether the money was deposited in his account. But he didn't do that, the NRB investigation revealed. 

Ichchha Bahadur Wagle, a director of the IDBL, however defended Humagain, saying that the loan issued to Kayal followed legal procedures as the chief executive can sanction loan up to Rs. 2.5 million without approval from the board as per the legal provision that time.

Both PDB and IDBL are in sound financial position. The capital adequacy ratio of PDB and IDBL has remained positive by 23.48 and 23.16 percent respectively. Both the banks have negligible non performing loans.

The central bank has promised them additional liquidity if required.

IDBL sources say Humagain is on leave for some days and out of contact.

"He is under tremendous pressure to resign," said a director of IDBL. "Now Humagain

has to find out the ways to uplift the image of the financial institution."

bank fraud case

•     NRB asks police to initiate action against Kayal and Humagain among others on banking fraud case
•     PDB board appoints Babulal Agrawal as officiating chairman and MD
•     PDD facing liquidity crisis as withdrawl mounts
•     NRB pledges support if cash crunch hits two banks
•     Financial stutus of both banks sound

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