Nepal Rastra Bank to liquidate Samjhana Finance

Nepal Rastra Bank (NRB) on Monday decided to send Samjhana Finance Company (SFC) into liquidation and declared United Development Bank (UDB) a ´troubled bank´. The central bank has also asked the management of SFC to furnish clarification within 15 days. SFC, which has mobilized deposits of Rs 180 million from general public, has a total liability of Rs 640 million. "The NRB board meeting took the decision, keeping in view the financial position and management status of the two financial institutions," an NRB official told Republica. The financially ailing SFC has mobilized Rs 20 million in deposits from the Army Welfare Fund operated by the Nepal Army. It has an outstanding loan worth Rs 210 million and its non-banking assets have been calculated at Rs 300 million. Headquartered in Banepa of Kavre district, SFC has two branches in Lalitpur and Kamalakshi of Kathmandu.

Saroj Bajracharya, manager of SFC´s Lalitpur branch, is in police custody for investigation, as most of the non-performing loans of SFC have been found issued by the branch. Bijay Mani Acharya, manager of SFC´s Kamalakshi branch, has left for greener pastures abroad after tendering resignation. Sources say the company is facing difficulty in preparing financial statement in the absence of experience manpower. The company has been found operating financial transactions through fake accounting statement after NRB, a year ago, directed it not to mobilize deposits and issue loans.

The central bank initiated investigation against the bank after depositors, whose money the company had deposited into fake accounts, asked the management to return their deposits. Though NRB has decided to send the company into liquidation, deposits of general public are not at risk as the collaterals pledged against loans issued are under its possession. The company has around 5,000 depositors.

The company managed to recover loans worth Rs 70 million over the past six months and returned the amount to depositors. NRB had declared Samjahana Finance a ´troubled´ financial institution about a year ago on the basis of its weak capital base and high non-performing asset (NPA).

Source:
myrepublica