In a statement issued last week, the central bank had signaled that deposits held by individual depositors can be recovered after the liquidation of the NDB, given the cash deposit structure that the bank currently holds. [break]
Talking to Republica, NA Spokesperson Brig Gen Ramindra Chhetri said all the depositors, whether individual or institutional, should be treated equally. "There shouldn´t be any categorization of depositors and whatever the amount of deposit is recovered after the liquidation process should be proportionally distributed among the depositors," Chhetri said.
He also stressed that deposits maintained by NA should not be treated like institutional deposits of a profit-making private company.
If fact the deposits, which belong to 92,000 incumbent soldiers and 55,000 pensioners, under Welfare Fund of NA should be treated as deposits of individuals, he said.
Chhetri further said that any loss of deposits will directly affect around 700,000 family members of serving and retired army personnel.
However, he said the Welfare Fund of NA, which manages around Rs 18 billion worth of deposits, is in talks with the central bank on the issue and expressed hope for a positive outcome.
He refuted allegations that NA was not careful while choosing healthy financial institutions to deposit its welfare fund and said that the NA did all its best to recover deposits held at the NDB after it smelt rat on the financial health of the bank. NA, which had over Rs 420 million at the NDB when it was declared problematic in October 2007, has managed to recover Rs 240 million before the NRB initiated process for NDB´s liquidation. According to the NRB, Rs 180 million of NA´s Welfare Fund is at risk at NDB.
Meanwhile, Employees Provident Fund, the largest institutional depositor of the NDB, has also requested the central bank to secure its deposits at the bank. According to a central bank officer, the EPF has recently sent a letter to the NRB claiming that, as per its act, it should be given top priority while distributing remaining deposits after liquidation.
Earlier, NRB had decided to send the long-troubled Nepal Development Bank into liquidation after concluding that all its five-year long effort to revive the bank failed owing to incompetent and defiant management.
The central bank had frozen all the transactions of the bank, including accounts maintained by the NDB at other financial institutions until the appointment of a liquidator. The NRB also sent a letter to the board of Nepal Development Bank asking it to justify why shouldn´t the NRB initiate liquidation process by filing a case at the Appellate Court in Patan.
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