Nepal Rastra Bank is planning to restart Karnali Development Bank by introducing new founders to raise capital, after the previous plan to allocate shares to old depositors failed. According to Tikaram Khatri, the chairman of the bank’s management committee, preparations are ongoing to collect around NPR 400 crore through new founders to revive the bank. Reports indicate that directors and senior management misappropriated NPR 127 million in cash, resulting in the bank’s net worth showing a negative NPR 246 crore. Location: Kathmandu, date: 17 Ashad.
After failing to revive the bank by issuing shares to depositors, Nepal Rastra Bank has advanced a second option. This involves bringing in new founders and implementing a plan to mobilize fresh capital. However, the plan to convert new stakeholders into shareholders has been stalled at the Nepal Securities Board. Despite an agreement between the central bank and depositors, instability in the board’s leadership has delayed the process, as explained by Tikaram Khatri.
Although permission has not yet been granted by the board, Khatri emphasized that the institution will not be prevented from restarting, and the plan to induct new founders as shareholders will proceed. Discussions are ongoing at the senior levels of the central bank regarding bringing in new founder shareholders to reopen Karnali Development Bank. Khatri further noted that once the central bank declares an institution problematic, securities law does not prohibit its reopening. After the plan to award shares to depositors hit regulatory hurdles, Nepal Rastra Bank Governor Prof. Dr. Vishwanath Paudel acknowledged the central bank’s limited authority in this matter.
