Posted by: ashishme December 31, 2012
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Yours for Rs 900 million ( 30% reduced price )
KATHMANDU, DEC 12 - After failing to attract bidders for Putalisadak-based Star Mall, crisis-ridden Nepal Share Market and Finance (NSMF) has extended the bid deadline by seven days for the second time.
The finance company had first called the bid on November 24 and had extended the deadline on December 9 after no one applied.
The sale of the shopping complex is must for NSMF to recover the money embezzled by its former chairman Yogendra Shrestha, who is currently in jail. Star Mall is promoted by Shrestha.
The finance company is ready to sell the mall located at one of the prime locations of Kathmandu, provided the bidders quoted around Rs 900 million. The Nepal Rastra Bank (NRB) has valued the property at Rs 1.3 billion.
Although the Citizens Investment Trust (CIT) was supposed to purchase the property, it is yet to decide on the matter due to high cost. “If the property could be sold at the price sought by NSMF, it will recover a big portion of the amount embezzled by Shrestha,” said Shyam Sundar Shrestha, senior manager at NSMF.
Shrestha embezzled Rs 1.72 billion from the finance company by creating fake loanees, as per a due diligence audit (DDA) report. He created 96 fake loanees to take the loaned amount by himself. The company has so far been able to recover just Rs 150 million from Shrestha by selling his shares in Machhapuchhre Bank.
The amount received from the sale of Star Mall will be first used to repay loans taken from Global Bank and Siddhartha Bank, where the property has been put up as collateral. These banks have invested over Rs 300 million in the mall.
The finance company also recovered Rs 375.5 million deposited in Star Saving and Credit Cooperative. The amount was recovered after selling Shrestha’s shares in Himal Hydro, which were put up as collateral at Star Saving and Credit Cooperative.
NSMF is also planning to sell Shrestha’s 24 annas of land at Kamaladi after completing Star Mall sales. As Shrestha owns enough property to recover from, both the finance company and the central bank have been saying NSMF depositors should not worry about their deposits.
Ever since the exposure of fund misappropriation at the company and subsequently the company was declared crisis-ridden, NSMF has been able to recover a substantial amount of loans that went to other loanees, although it struggled to recover from Shrestha.
As a result, it has been able reduce its liabilities to depositors considerably over the last year. When the fraud at NSMF was uncovered on May 9, 2011, the company had deposits worth Rs 3.12 billion and loans worth Rs 5.26 billion. But the company, as of a few days ago, has been able to reduce its deposit mobilisation to Rs 1.5 billion and lending to Rs 1.41 billion, according to the finance company.
NSMF currently has 13,000 depositors. Despite the recovery of a huge chunk of loans, its financial status is yet to improve as it is still struggling to recover the amount misappropriated by Shrestha.
When the finance company was declared crisis ridden on January 12, 2012, its capital adequacy ratio was negative by 5.73 percent which has now deteriorated further to 7 percent, according to NSM officials. “It is due to the conversion of a few good loans to bad over the period,” said NSM’s Shyam Sundar Shrestha.
Declaring crisis-ridden, the central bank had given NSMF six months time to improve its financial health, but the former is yet to take further action. An NRB official said the central bank was in ‘wait-and-see mode’ as the company is in the process of selling Star Mall.
Earlier, central bank had prevented Global and Siddhartha banks from auctioning the property, saying there were chances that the property fetched a better price if NSMF was allowed to sell the property itself. “The aim of central bank is to receive more amounts so that more depositors could be paid back their deposits,” said the central bank official.