KATHMANDU, Dec 14: More than Rs 230 million of the the Army Welfare Fund has been subjected to risk as three different financial institutions where the fund´s money were deposited have been tagged ´problematic´ by the central bank.
Worse, NA says Samjhana Finance, Nepal Sri Lanka Merchant Bank and United Development Bank -- the three financial institutions -- have not been repaying the fund´s deposits even as the tenures of the fixed deposits have already matured.
NA has deposited Rs 16 million in Samjhana Finance and Rs 149.2 million in Nepal Sri Lanka Merchant Bank. It also has additional Rs 60 million in United Development Bank, records show.
About a year ago, Nepal Rastra Bank had declared Samjhana Finance as ´crisis-ridden´ on the basis of its weak capital base and high non-performing asset (NPA). United Development Bank too has been tagged ´problematic´ for its failure to inject additional capital.
“Nepal Sri Lanka Merchant Bank too is in no position to repay its depositors,” said an NRB source, adding that all these financial institutions are highly vulnerable and have been required to prompt corrective actions.
However, NA says it fears it might lose another huge chunk from the welfare fund. “This will directly impact around 800,000 people including army personnel, ex-army personnel and their dependants,” said an army official.
With the risk, NA recently knocked on the doors of Nepal Rastra Bank (NRB), seeking the bank´s help to recover the deposits. The NA headquarters wrote to the NRB on December 8 requesting help.
The letter mentions that the banks have not paid back the NA the deposited amounts even after deposit maturity despite repeated requests. It has also drawn NRB´s attention to the money it lost in similar circumstances at Nepal Development Bank (NDB).
The NA had deposited some Rs 330 million in the troubled NDB, which the central bank subjected to liquidation. “We have yet to recover Rs 180 million from NDB,” said NA spokesperson Ramindra Chhetri.
NRB officials, meanwhile, said that they could do nothing to help NA recover the deposits. “The onus of safekeeping and selecting healthy banks and financial institutions lies on depositors. We cannot treat NA differently,” said an NRB source.
NA says that it was mere coincidence that a few of the institutions wherein it deposited its funds turned out to be problematic. NA even views that it was central bank´s duty to protect depositors, and hence, it should look into its cases.
http://www.myrepublica.com/portal/index.php?action=news_details&news_id=26157
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