NDB liquidation: Court appoints probe officer

KATHMANDU, July 30 - Patan Appellate Court has appointed Chartered Accountant Tirtha Raj Updhyaya as an investigating officer to advise whether or not Nepal Development Bank (NDB) should be liquidated.
A division bench of justices Mohan Prasad Ghimire and Dinesh Kumar Karki on Wednesday gave Upadhaya a three-month timeline to submit his report. The investigating officer is expected to start his work within the next three days.
As per the insolvency act such a report is critical before taking any decision to liquidate any financial institution.
This is the first time the court has appointed an investigation officer as per insolvency act. It is the first ever instance of any financial institution being taken to court for liquidation.
The court however hasn't decided on the Nepal Rastra Bank (NRB)'s plea to pay off the money belonging to ordinary depositors. NDB has deposits worth around Rs. 190 million of ordinary depositors. Since NDB has deposits in other financial institutions, NRB has been trying to get back that money to the ordinary depositors.
Nepal Rastra Bank (NRB) had registered an application at the Patan Appellate Court on July 3, seeking liquidation of crisis-ridden Nepal Development Bank (NDB).
On the basis of the investigation officer's report if the court gives an order to liquidate the bank, the company registrar will appoint a liquidator to proceed with the liquidation process. The liquidator after comprehensive evaluation, will sell off the bank assets. The money received from selling is used to pay back the depositors and creditors of the bank.
The Bank and Financial Institution Act (BAFIA) has given first priority to ordinary depositors after the liquidator's expenses followed by fixed depositors and then only other types of depositors.
But there is slim chance that institutional depositors of the bank, Nepal Army and the Employees' Provident Fund (EPF) will get their money back. The Army and the EPF have deposited Rs. 331 million and Rs. 180 million in NDB, respectively.
The central bank has already told that common people who have invested their money to buy the rights shares of the bank, will get their money back. The common depositors had invested Rs. 81 million for the such shares.
Kantipur Report