Nepal Rastra Bank has taken over the management of NCC Bank

February 4, 2014
Central bank of Nepal, The Nepal Rastra Bank (NRB) has taken over the management of Nepal Credit and Commerce (NCC) Bank. NRB on Tuesday (February 4th 2014) dissolved the NCC board of director as the NRB’s efforts to settle down the dispute between two promoter groups went vain and handed it over to a three- member of management led by NRB Director Laxmi Prapanna Niraula after expiry of the deadline given by NRB to resolve the internal dispute among the board members. The other management team, including NRB Deputy Director Ramesh Acharya and Assistant Director Resham Raj Regmi, has been authorized to use the rights of the board of directors. The existing management team will continue to work under NRB team. The daily operation of the bank has been severely affected by the dispute between the two factions. NRB officials said it had to intervene as two factions could not be brought into a harmony despite maximum efforts from its part. They said the two factions were registering complaints against each other at various authorities, including the NRB and Commission for Investigation of Abuse of Authority (CIAA). However, both factions had agreed to settle down their disputes through a special general meeting. The establishment faction (NB Group) wanted all the board of directors to be elected by the special general meeting, but their counterpart faction disagreed as two of three public directors Ved Man Singh Malla were associated with NB Group and two others directors, Ashok Samsher Rana and Hari Prasad Bharrarai, are associated with the Pradhan Group.

The dispute had been rising due to differences between the shareholders of Laxmi Bahadur Shrestha and Nirmal Pradhan group. Most of the board members close to Shrestha were elected along with Chairperson Prithvi Raj Legal by the 15th Annual General Meeting (AGM) last March. Hari Bhattarai, Tirtha Pradhan and Ashok Shumsher Rana were representing the Pradhan faction in the board. The Shrestha family owns almost 32 percent of the 14 million promoter shares.
NCC bank has deposits worth Rs 22.02 billion and mobilized the loans worth Rs 17.6 billions, as of mid- January. It has more than 14.7 million ordinary shares listed at Nepal Stock Exchange (NEPSE) and 14 million of additional promoter shares. Based on the allegations, NRB had conducted an on-site supervision of the bank.
In May 2009, NRB had taken over the management of Bank of Kathmandu owing the dispute between the bank’s directors and management. Similarly, central bank also took over the management of Nepal Bangladesh Bank in 2006, due to its worse financial health. Likewise, NRB had taken over the management of Nepal Share Market and Finance Limited in February 2014, due to huge scale fraud committed by Chairperson Yogendra Prasad Shrestha. Central bank is handling the management of Gurkha Bikas Bank since January 2013.
If NCC Bank is supposed to be capable of fulfilling its liability as per the NRB’s report, it will convene a general assembly and hand over the bank to the elected board of directors. NRB stated that the bank will be handed over to the new board by providing a deadline of a year to come with the agenda of merger as required to complete capital by the end of the current fiscal year.