KATHMANDU, July 25: The Central Investigation Bureau (CIB) has reported that the Karnali Development Bank Limited (KDBL) misappropriated a total of Rs 3.20 billion of the depositors’ money.
According to CIB’s Spokesperson SSP Hobindra Bogati, the national investigation agency has ascertained the embezzlement of the amount. In addition, the CIB in its report has pointed out 111 individuals involved in the KDBL scam. Of the accused, 104 are absconding and four have been arrested, while three were dead.
The CIB has also found out the involvement of the KDBL’s Board members and employees along with a senior official of Nepal Rastra Bank (NRB) in the scam of the ‘B’ class bank and financial institution. The KDBL, in collusion with NRB officials, had been hiding the actual financial status to misuse the huge amount of funds.
CIB’s arrest of NRB official in KDBL scam sparks oversight conc...
Earlier, the KDBL had claimed its capital adequacy ratio at 10.05 percent and a non-performing loan (NPL) ratio of just 7.24 percent in its first quarterly financial statement for the Fiscal Year (FY) 2023/24. However, a subsequent NRB audit revealed the actual NPL ratio was as high as 40.85 percent, with the Tier 1 capital requirement as low as four percent, which was below the regulatory threshold of 4.5 percent.
A prior investigation by the central bank uncovered that Rs 1.33 billion in deposits were misappropriated. Moreover, nearly half of the bank’s total loan portfolio had been extended to companies owned by Board members or their relatives, indicating widespread abuse of authority and severe governance failures.
The KDBL had collected deposits of Rs 4.90 billion from the general people. Last December, the NRB took over the management of KDBL by declaring the ‘B’ class financial institution as crisis-ridden. After falling into financial crisis, the development bank has now been unable to return its depositors’ money.
The CIB has already arrested the KDBL’s founding Chairperson Rajendra Bir Raya and a former chairperson Pashupati Dayal Mishra. Last week, it arrested Bhuwan Basnet, a former senior official of the NRB, on charges of manipulating the financial status of the KDBL.
