CIB arrests 13 of Apex Bank over banking fraud

Published On: March 17, 2018 07:08 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, March 16: Thirteen persons of erstwhile Apex Development Bank -- promoters and employees -- have been arrested on the charge of banking offence to the tune of  Rs 1.6 billion. The bank, which merged with Nepal Credit and Commerce Bank Limited in January last year, had issued loans without informing the latter although it had already entered the merger process. The loans later turned into bad loans. 

Central Investigation Bureau (CIB) of Nepal Police arrested erstwhile chairman of the bank Bishnu Prasad Dhital and promoters Ichha Bahadur Gurung, Subarna Raj Bhandari and Madhuban Lal Shrestha in connection with the loans issued illegally from its branches at Durbarmarg and Lokanthali and in Itahari, Surkhet and Nepalgunj. 

The bank’s erstwhile acting CEO Rishiraj Bhatta, senior manager Durga Dutta Joshi, deputy general manager Ramchandra Basaula, branch manager Bikash Shrestha and branch manager at Lokanthali Sagar Neupane were also  arrested. The others arrested in what is one of the largest banking fraud in the country include branch manager Man Bahadur Raut, loan officer Mohan Kharel and branch manager Sudip Thapa.  In a press statement issued on Friday, CIB said, “The bank had put the money of the public at  risk and also protected borrowers who were not making loan repayments in installments.” 

The bank had provided loans to various persons on the basis  of over-valuation of low quality land offered as collateral and fake income documents submitted by the borrowers. It also created artificial borrowers and issued second loans to borrowers who had failed to make monthly repayments on the first loans, according to CIB. The low quality lands have, moreover, been fragmented and sold to different persons for creating several borrowers, and also  documents were doctored to show road connectivity. 

The bank officials had  carried out the essential steps for processing the loans all on the same day. It normally takes several  days and sometimes weeks to complete the whole process. Observation visits by bank staff to the collateral land, preparation of the loan documents and the actual loan disbursement were all completed on the same day.

Nepal Rastra Bank (NRB) spokesman Narayan Prasad Paudel said the central bank had corresponded with CIB for further investigations into the issue after finding serious flaws in the loan disbursements. NRB had found several files on loans disbursed without properly following the process. 

CIB said it is looking into as many as 150 cases of banking offence in the current fiscal year against less than a dozen such cases annually in recent  years.  

Earlier, in 2012, Capital Merchant and Finance Company had landed in trouble after it failed to recover its loans. Its managing director, Pawan Kumar Karki, had taken loans of over Rs 3 billion in the names of 44 individuals in Kavre and Kathmandu. He was later  convicted  of  fraud perpetrated between 2008 and 2012  and amounting to Rs 3.6 billion. But he  is absconding. Interpol has issued a diffusion notice to Karki after the US declined to repatriate him.

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