Small depositors may get back partial deposits.

REPUBLICA
KATHMANDU, Sept 13: Small depositors of troubled Nepal Development Bank (NDB), which is subjugated at the Patan Appellate Court for liquidation, could be allowed to withdraw 50 percent of their savings or Rs 200,000, whichever is higher, before the Dashain festival that is a couple of weeks away. The possibility emerged after the court-appointed investigation authority TR Upadhyaya, mandated to suggest norms for refunding savings of small depositors, recommended the county to allow small depositors withdraw part of their savings. The central bank that previously assured the small depositors of getting their deposits back has also given its nod for partial withdrawal.
"I made the recommendation considering that many of you might direly need the money to celebrate upcoming festivals," said senior chartered accountant TR Upadhyaya, addressing the depositors and public shareholders of the bank. He, however, clarified that his proposal would need approval of the court to come into implementation.Depositors of the bank said they were hopeful of the court taking ´practical´ considerations while deciding on the matter on Wednesday.Upadhyaya elaborated that he was under a serious pressure of categorizing small depositors from other depositors. "There are small-time depositors as well, and if I say all-time deposit holders are big, then it will be great injustice for them. Unfortunately, the existing laws do not size depositors as small or big," said he.As for the fate of the bank, whose all assets have been frozen and which has been pushed for liquidation by the central bank, Upadhyaya said he was still working on whether the bank can be sustainably restructured.
According to the information disseminated at the program, a group led by Badri Bhattarai have submitted NDB revival proposal to the investigation authority, promising to re-inject capital of Rs 640 million -- something that is needed to do away with its negative net worth. The team also includes past promoters and has already deposited capital of Rs 250 million. It has also submitted a commitment of bank guarantee for additional Rs 240 million. The group, however, said that it will generate remaining money by disposing frozen assets of the bank and recovering Rs 90 million that the bank has deposited in Nepal Cooperatives.Responding to NDB depositors and shareholders, Upadhyaya said it would be in the interest of both individual depositors and shareholders to revive the bank than liquidate it. "But it is difficult to convince over the proposal submitted so far. I cannot say NRB to release the assets as well," said Upadhyaya. He further added that he would report his suggestions to the court soon. Based on his report, the court will decide on whether to grant permission to NRB to liquidate the bank.NRB lodged a petition at the Patan Appellate Court in June after its June 2 board meeting decided to send the long-troubled bank into liquidation, concluding that all its five-year long effort to revive the bank failed because of incompetent and defiant management.

Bid to revive sick NDB

KATHMANDU: Two groups have submitted proposals to investigation officer TR Upadhyaya to revive troubled Nepal Development Bank (NDB).Nimbus Group of Jagdish Agrawal alongwith World Link, ICTC Group, Golchha Group, Kailash Chandra Goyal, Ravi Singh Group, Guna Chandra Bista and others have submitted one proposal. Badri Bhattarai, the current promoter of NDB, and his group have submitted another proposal.
“After investigation, we found that NDB has Rs 90 million cash but the deposits of the public — except organisations — come to around Rs 350 million,” said Upadhyaya whom Patan Appellate Court on July 29 appointed the investigation officer to report and start the insolvency process.The Court has ordered that small depositors be paid first.
“If Rs 90 million is distributed among the public depositors, they will one get just one-fourth of their real deposit,” he said adding that the definition of small depositors was unclear.“Revival of the troubled bank might be the best option,” he said adding that he has called both the groups to discuss their detailed capital plan.
“After meeting both the groups and discussing their proposals in detail, if I am convinced I will advise the court to revive the bank,” Upadhyaya added.Nimbus Group and its associates are ready to deposit Rs 32 million as and when Nepal Rastra Bank asks and also to prepare a capital plan within three months.“We are planning to inject Rs 320 million after detailed study,” said Sudarshan Raj Pandey, a representative of the group that also plans to buy out the promoters who are responsible for damaging the bank.
“We wil buy the shares of the promoters responsible for damage to the bank at one rupee per share and buy them out,” he said adding that after that they plan to issue rights shares to increase the capital to Rs 640 million by the end of 2010.If the rights shares are not sold completely, we will buy them,” Pandey said assuring the depositors that if they want to take their deposit back after Nimbus starts running the bank, they will be allowed to do so.The other group led by Badri Bhattarai has claimed that it is ready to inject Rs 640 million but has not elaborated its plan.
Meanwhile, the Supreme Court has declined to issue a stay order as demanded by the Employees’ Provident Fund (EPF) to protect its deposit in the process of liquidating NDB.Directing to return the deposit of the small depositors first, Patan Appellate Court had okayed the liquidation of NDB. The court has directed to start the process of liquidation as per the Insolvency Act 2007.

Two groups interested to revive NDB

KATHMANDU, Aug 10: Two groups have shown interest to give a new lease of life to the troubled Nepal Development Bank, which is facing liquidation, by injecting adequate capital in the financial institution.
Nimbus, a leading agri-business enterprise, has said it will immediately invest Rs 32 million in the bank, if the appeal court agrees to transfer the ownership of the bank to the group. The group also said it would add more capital only after three months.
"We need time to examine the condition of the bank and the damage that has been caused to the financial institution," Sudarsan Raj Pandey, a chartered accountant and consultant of Nimbus, told a gathering organized in Kathmandu on Monday. "If the financial health of the bank is the same as we are told, we will take over the bank´s management. But if the losses are far greater than what has been reported, we don´t want to risk our investment by shouldering the liabilities.
"Nimbus has also asked the concerned authority to make promoters´ shares available to it at Re 1 per unit. “This will be applicable to only those promoters who were directly involved in deteriorating the financial health of the bank,” Pandey said.If these conditions are met and the ownership transferred to Nimbus, the group has set a target of increasing the capital base of the bank to Rs 640 million within the end of this fiscal year and to Rs 960 million by the end of 2010/11.
The bank currently has an accumulated loss of Rs 650 million.However, another group, led by Badri Prasad Bhattarai, has not set any conditions."If we are allowed to run the bank, we are ready to issue a bank guarantee of Rs 640 million immediately," said Bhattarai, one of the promoters of the troubled bank, who owns 10,000 units of shares, without revealing the identity of the people and groups backing him. But he clarified that none of the old promoters would be included in the new team.
Bhattarai also claimed that his group could recover bad debts worth around Rs 200 million within a month. He also claimed that the two biggest institutional depositors -- Nepalese Army and Employees´ Provident Fund -- had assured him that they wouldn´t withdraw their deposits if the new management takes over the bank.
Tirtha Upadhyaya, a chartered accountant who has been appointed by Patan Appellate Court to reassess the financial status of the bank, also said it would be in the interest of both individual depositors and shareholders to revive the bank than liquidate it. - REPUBLICA

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