KATHMANDU, Jan 2: Karnali Development Bank Limited (KDBL), which was declared crisis-ridden by Nepal Rastra Bank (NRB), has started returning depositors’ money with the bank.
Issuing a public notice on Thursday, the KDBL notified its customers that it would be returning the money of its depositors on priority basis. According to the B class financial institution, which has been taken over by an NRB team, the depositors in categories of sick, old age and children and with an amount of Rs 25,000 at maximum are considered under priority to return the deposits.
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In its first phase, the KDBL provided the prescribed amount to 50 depositors from each of its 19 branches located in Bake, Dang and Bardiya districts.
On December 25, the NRB decided to take over the management of the KDBL by declaring the B class financial institution as crisis-ridden. The NRB’s three-member management team led by the deputy-director of the Banks and Financial Institutions Regulation Department, Tikaram Khatiwada, has taken over the management of the Nepalgunj-based development bank.
The NRB team has been mandated to carry out repayment of the depositors’ amount at the KDBL, recover the loans from the KDBL’s borrowers, and initiate necessary work to conduct a due diligence audit and investigation into the financial misappropriation that took place in the KDBL.
The KDBL failed to maintain the minimum capital adequacy ratio as prescribed by the regulatory body. The central bank has also accused the KDBL of weak institutional good governance, being involved in suspected financial misappropriation and facing poor liquidity conditions. The KDBL’s non-performing loan was found as high as 40.85 percent.
