EPF, NA to get deposits back from the liquidated bank

KATHMANDU, Jan 27: Contrary to the initial wariness, it has now become clear that institutional depositors of Nepal Development Bank (NDB) - Employment Provident Fund (EPF) and Nepal Army (NA) -- could get all their deposits back from the bank subjected to liquidation.

Chartered Accountant Narayan Bajaj, liquidator of the NDB, said he has so far recovered bank-issued loans worth Rs 100 million and would start distributing the money to institutional depositors soon.

Moreover, referring to latest recovery trend, he said he might be able to repay their remaining deposits as well in the future.

NDB presently has total outstanding deposits liability of over Rs 490 million, including Rs 320 million of EPF and Rs 170 million of NA. It has cash deposit worth Rs 105 million in Nepal Cooperatives Bank, loans worth Rs 400 million and non-banking assets worth Rs 140 million.

“It might take time, but these figures indicate that we will be able to clear all those deposit liabilities,” Bajaj told Republica.

However, as the fresh collection of Rs 100 million stand far less than what the two institutional depositors had saved at the bank, the liquidator is currently discussing ways to distribute it among them. Mainly, he needs to decide on whether to distribute the amount equally or proportionately.

EPF, which has much larger deposit than NA, is pushing for proportionate distribution, whereas NA has requested for equal distribution of the recovered amount.
“We will finalize the modality after consulting the Nepal Rastra Bank as well as existing legal provisions,” said Bajaj.

Nepal Rastra Bank (NRB) - the central monetary authority -- had decided to liquidate the troubled NDB in June, 2009 after its five-year efforts to revive the bank failed owing to incompetent and defiant management. With the Appellate Court endorsing its decision, NDB had become the first bank to be liquidated in the country´s banking history.

Since then, liquidator has recovered loans worth Rs 150 million. During the course, the liquidator cleared all saving dues of 3,391 small depositors and even repaid Rs 10 million each to EPF and NA. He has filed a few cases at the Debt Recovery Tribunal and is also preparing to lodge additional petitions to recover remaining loans.

Bajaj said he might need support of the government as well as other stakeholders to recover the savings and loans of the bank.

The liquidator is mainly facing problems in getting back Rs 105 million that the bank deposited at Nepal Cooperatives Bank. Despite his repeated efforts, the cooperative has not handed over the money to him even though its repayment period has already matured.

Bajaj is also facing problem in recouping property worth Rs 10 million at Gorkha Hydro and other assets worth Rs 2.5 million.

“We have knocked the doors of Debt Recovery Tribunal to recover the loans. However, we need the support of all stakeholders as the effort of liquidator alone might not be enough,” Bajaj stated.

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