According to sources familiar with developments, Manakamana Cable Car group, another group led by renowned hotelier B K Shrestha, a group led by Rameshwar Thapa, one of the owners of Simrik Air and a director of Kantipur Publications, and a forth group headed by travel businessman Arjun Thapa, applied to the central bank some two week back. “The central bank is positive towards the proposal and will soon allow the groups to inject capital into the bank that has been a headache for the central bank,” said a high-ranking NRB official.
As per the understanding reached among the four groups, each will invest Rs 135 million into the bank that was declared troubled by the central bank in August 2006 after a series of serious financial irregularities pushed it to the verge of collapse. The accumulated loss of the bank had touched Rs 280 million, around double its total paid-up capital, giving it a negative net worth of over Rs 147 million.
If the central bank approves the proposal, the bank that already has paid up capital worth Rs 160 million will have paid up capital worth one billion rupees, after it issues shares worth Rs 300 million for the general public, said the source. The bank, which was promoted by a group of around 400 shareholders led by Sita Ram Prassain, had a non-performing loan (troublesome loans) ratio as high as 43 percent when it was declared troubled.
Talking to myrepublica.com, a member of an investment group informed that a team of financial experts had conducted a three-month long study, focusing mainly on the financial aspect of the bank. “We decided to invest in the bank after the study found that of the total investment of Rs 280 million, Rs 180 million was recoverable as it has been backed by good collaterals,” he said. The bank has bad loans amounting to around Rs 100 million and this amount will be 10 percent of paid up capital.
A special general meeting of shareholders called by the management of CSIDN bank has already approved a special proposal allowing new businessmen to invest in the bank. The investment group member further said the consortium is also planning to purchase shares of the bank owned by the central bank. Employees Provident Fund and NRB were the major promoters of the bank, with equity investments of 15 percent and 10 percent respectively. Likewise, Prasain, who was chief of the bank, had a 9 percent share in the bank.
The bank had a total deposit of Rs 605.5 million and lending of over Rs 700 million by mid-April, 2006. Owing to an accumulated loss of Rs 280 million, the bank had been unable to refund deposits of major clients.
prem@myrepublica.com
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