Speaking to the press for the first time after the central bank decided to liquidate NDB, Uttam Pun, the former chairman and one of the promoters of NDB, claimed that the financial condition of the bank had not deteriorated to the extent as has been claimed by the central bank. He also said that NRB could take whatever action it wanted against him and the bank´s management if they were found guilty of flouting NRB´s banking regulations.
"An independent investigation committee should be formed and it should look into all the past activities of the bank. If the investigation concludes that mistakes were committed by me, I am willing to go to jail," said Pun, who had agreed to talk during the press meet upon repeated requests from media personnel, and the depositors and shareholders of NDB.
Pun, clad in a red Polo T-shirt and coat, looked confident during his 15-minute speech. He defended every move made by NDB so far, and he said that the central bank had repeatedly tried to take action against NDB "because of my unwillingness to, without arguing, kowtow to whatever they said." As he continued with his talk, he also seemed to win the confidence of the depositors and shareholders--until he made a sarcastic comment about the media´s coverage of the issue. Soon after he said that the Nepali media were printing or broadcasting whatever was being fed by NRB, members of the press came down heavily upon him.
"What are you trying to say?" asked a journalist from Nepal Television. "That we are publishing and broadcasting news based on illusion?"
The fact of the matter is NDB is a troubled bank. Its non-performing loans stood at 30.43 percent of the loan portfolio till mid-March 2009. Seeing its dismal performance, NRB had been asking NDB to improve its financial health for the last five years. But because its situation continued to worsen, NDB on June 2 decided to finally liquidate the bank.
To begin the process of liquidation, NRB sent a letter to NDB last Thursday, asking NDB´s management to justify why the central bank shouldn´t liquidate it. NDB was ordered to furnish explanations within 15 days of receiving the letter.
However, NDB claimed that the bank´s condition was not as bad as had been concluded by NRB. "NDB only has an accumulated loss of Rs 620 million, whereas Rastriya Banijya Bank has an accumulated loss of Rs 15.13 billion, and Nepal Bank Limited has an accumulated loss of Rs 5.51 billion; even private sector banks such as Nepal Bangladesh Bank has an accumulated loss of around two billion rupees, and Nepal Credit and Commerce Bank has an accumulated loss of Rs 420 million," said Amar Gurung, chairman of NDB. "Is NRB trying to liquidate them as well? We need an answer. If it is not, is NRB, which should be playing a guardian´s role, discriminating among banks?"
He also said the bank has recovered Rs 46.6 million of its bad loans and that the bank has collected an additional Rs 68.6 million through the sale of its non-banking assets. "We have also returned deposits of Rs 485.5 million deposited by the Nepal Army Welfare Fund and deposits of Rs 470 million of the Provident Fund," Gurung said. "All these things show that the financial condition of the bank has improved significantly and that NRB´s decision to liquidate the bank at this stage was not one taken in the interest of the public shareholders and individual depositors."
The Association of Nepali Development Banks and the Association of Nepali Finance Companies have also asked NRB not to liquidate the bank, but to instead, make efforts to revive its financial condition by working together.
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