“Necessary investigation has been launched against the duo, who pushed the finance company to the verge of collapse by extending loans in an illegal manner,” a CIB statement says.[break]
Nepal Rastra Bank (NRB) had earlier declared the finance company as a troubled entity after the banking sector regulator found that the institution was maintaining a negative core capital of 7.82 percent.
The finance company was also found to have kept shoddy record of borrowers, with credit details of many missing from records of the institution.
“It was also extending and renewing many loans haphazardly without conducting any inspection on use of credit, while records of many borrowers who had returned the loan amount were erased,” said the NRB report. “As a result, the quality of most of the loans it had extended was of inferior quality and recovery of these loans seemed difficult.”
At the same time, the finance company was also found to be issuing threats to depositors who came to withdraw their funds from the institution. “And all the while the company was submitting doctored financial statements to the central bank,” the NRB report said.
Related story
CIB arrests Prabhu Bank CEO Sherchan, two senior officials over...
