NRB gears up to liquidate BFIs in crisis: Nepal Rastra Bank (NRB) has geared up its move to liquidate banks and financial institutions that are in crisis. The central bank has decided to expedite its move in response to the growing number of complaints against such financial institutions lodged by the depositors, according to NRB sources. The NRB wants to make sure that these banks and financial institutions (BFIs) refund the deposits before they are liquidated, the sources added. The BFIs that the central bank has already decided to liquidate are Nepal Bikash Bank, Samjhana Finance and United Bikash Bank Limited while those in crisis include Gorkha Development Bank, Nepal Share Market and Finance, Cristal Finance, Kuber Merchant Finance, Himalaya Finance, Capital Merchant Banking and Finance, World Merchant Banking and Finance and General Finance. There is a provision in the Bank and Financial Institution Act-2006, which allows the central bank to scrap the BFIs which do not show signs of improvement even six months after they get into crisis. However, due to delay in enforcement of the provision some of such BFIs have been operating more than two and a half years even after they got into crisis. It may be noted here that the central bank is taking its time to liquidate the BFis in crisis since liquidating them promptly could be more risky for the depositors. The NRB governor, Dr Yuva Raj Khatiwoda, has stated that the central bank has been devising a strategy to take these BFIs under its control and gradually release the depositors’ money by disposing the concerned institution’s assets before they are liquidated. As per the legal provision, the central bank has to file a case at the Appellate Court to liquidate the BFIs in crisis, and the court will then appoint a liquidator.
Posted on: Fri, 13 Sep 2013 13:35:06 +0000