Nepal Bangladesh Bank (NBB) and Nepal Credit and Commerce Bank (NCC) may face action from the Nepal Rastra Bank (NRB) for failing to abide by the central bank’s directives regarding the recovery of loans gone to its key promoters.
NRB officials said a supervision report has suggested action against the two banks for failing to blacklist their promoters not paying loans and failing other several off-site and onsite directions of the central bank. The report has been forwarded to central bank’s board.
NB Group is the main promoter of both the banks. The central bank says even after the handover of NBB bank management one year ago, the bank has failed to recover loans from the people related to the group, which stands at around Rs 30 million.
A senior NRB official said the central bank had told the NBB to blacklist the loanee and recover the loans which were not followed.
“The report suggests taking necessary action against both the banks after seeking clarification,” said the NRB official.
The existing rule bars the promoters from taking loans from the same bank they have promoted. The NBB management, however, has been maintaining that there were no such loans related to promoters to be recovered.
After taking over NBB for three years, the central bank had handed over the NB bank management to new board elected by annual general meeting a year ago. According to NRB officials, the new management was told to recover the loans from the promoters at the earliest.
NRB supervision report has also upped non performing loans of the NBB to 10 percent by not recognising the restructuring of two major loans of the NBB. Single person representing different sub-committees under the board and members of one sub-committee taking decision of another unrelated sub-committee are the other faults identified about the bank.
On the other hand, the NCC bank has been blamed of failing to sell non-banking assets (NBA) it acquired from Hari Siddhi Ceramics Company owned by NB Group.
NRB had first told the NCC to sell the NBA within mid-April last year which was later extended to mid-August. The bank issued an auction notice on July 29 to sell 110 ropanies of land out of 193 ropanies.
NRB had told the bank to go for auction of the lands of Harisiddhi, as the promoter group had an interest in the acquired land. But, now, the auction process has been stalled after Lalitpur District Court stayed the sale.
NRB officials are not sure whether the central bank’s board would take any action against the banks. “The NBB management was handed over the new board prior to the full recovery of the loans from the promoters,” said a senior NRB official. “Despite supervision department’s clear suggestion not to handover the bank management, the board had decided to handover it.”
Posted on: 2010-11-18 07:44