The company had closed operations without any message on Monday and there was no staff member at the office on Tuesday to tell KC whether or not his savings was safe.[break]
“I was doing business with this company since more than two decades and never suspected it will meet such a fate,” said KC and lamented that his treatment would now be affected as he depending on interest return for the medication.
KC was one among hundreds of clients of People´s Finance that rushed to the company´s office at Tripureshwar with the hope of withdrawing their deposits after news of its closure were carried by media. But they had to return disappointed as they could find no one to talk except about a dozen security guards manning the building.
They were furious at the company officials for not being available to disseminate proper information to them.
“At least they should inform us why the company was closed and when we are going to get our payment,” Rishi Gyawali of Gulmi said. He said the company was making situation more complicated for itself by being irresponsible to its customers.
More than 21 years into operations, PFL was offering up to 16 percent interest rate on fixed deposit. And most of the depositors like Anjana Chitrakar of Thapathali said they had deposited their money in the company because they knew staff members and promoters there.
“Sadly, none of them are in contact when I need to talk to them desperately,” said Chitrakar, who had deposited Rs 500,000 in 2-year fixed deposit scheme. Chitrakar told Republica that she had been preparing to transfer the amount into a commercial bank as it was maturing in two months.
The depositors slammed the PFL management for not informing them when the company was resuming services.
Interestingly Keshav Prasad Bhattarai, deputy chief executive of PFL, who led the decision to shut down the operations, too, said that he was not in a position to say anything now.
“We have surrendered to the central bank as we do not have necessary liquidity to pay our depositors, and borrowers are not repaying on time,” he said, adding that the company will decide its future course of action in 2-3 days.
Bhattarai even claimed that the problem faced by the company was of temporary nature.
PFL on Monday had reported NRB that it has only Rs 2.5 million in cash and its executive chairman, who had promised to arrange cash, was out of contact for the past three days.
Depositors of PFL, meanwhile, said they were visiting NRB head office on Wednesday to request the central bank help them recover their deposits.
Probe team smells a rat
A special inspection team formed by the Nepal Rastra Bank (NRB) to dig out facts behind closure of People´s Finance Limited (PFL) and sudden disappearance of its executive chairman has reckoned that its executive chairman Chhabilal Bhusal was involved in irregularity while issuing loans and had indirectly taken loans to run personal real estate business.
Lending portfolio of PFL shows that it had issued nearly 80 percent of total loans in the real estate and housing sector.
"Some of those loans were issued by sharply inflating the value of collateral," said a source.
Likewise, the team found that Bhusal had influenced the board to empower him with the right by means of which he could single-handedly decide on loans up to Rs 150 million. "Bhusal has exercised this right about a dozen times. We believe those loans deal are problematic," said the source.
Bhusal had issued those loans when real estate business was at its peak. But as the real estate sector has crashed, the company became unable to recover both interest and principal amount.
Deputy Governor of NRB, Maha Prasad Adhikari, said it was too early to make any prediction on the case as the inspection team was yet to submit the report.
"The incidents show there are some wrongdoings, but we cannot say for certain what those are," he added.
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