E-Kantipur

KATHMANDU, SEP 24 -

Nepal Rastra Bank ( NRB ) has asked Sunrise Bank, Prime Commercial Bank and Bank of Asia not to foreclose on Prabin Naulakha of Krishi Premura Holding with the expectation that the collateral could sell for a higher price than what they would get at auction.

The central bank has been preventing the three banks from auctioning off land at Kamaladi, Kathmandu, for defaulting a loan worth Rs 270 million.

After the valuator fixed the distressed value of the property at Rs 350 million for auction, Krishi Premura, which had planned to construct JSB financial tower on it, asked for extra time from the central bank claiming that they were getting a much higher offer from foreign investors.

With Gurkha Development Bank and NIC Bank also making claims on the land as second and third charge, the value fixed by the three banks fell short of the amount owed to the five banks and financial institutions.

Gurkha has claims of Rs 370 million while NIC also has a claim on it. Krishi Premura said that it had found a party, Santino Global from Belize, a Caribbean country, which is ready to buy the land for US$ 10 million, and that it had already received a US$ 200,000 advance from it.

“After the loanee provided evidence that it could generate resources of US$ 10 million by selling the land to a foreign party, we decided to give it more time so that all the loans provided against that collateral could be repaid,” said a senior NRB official.

Initially, the central bank had set a mid-July deadline for the sale of the land; it later extended the deadline until mid-October.

However, there has been hardly any progress on selling the property to Santino Global. “First of all, the land’s ownership should be transferred to Krishi Premura Properties from Shubham Investment,” said Rakesh Adukiya, chief of Krishi Premura. Subham Investment’s name was changed to Krishi Premura Properties, but the land remained in the name of Subham Investment.

“We have not been able to complete the necessary paperwork as NIC Bank has been preventing us from selling the land by laying claim to it,” said Adukiya. NIC had provided loans to Adukiya’s firm against other collateral, but has laid claim to the collateral as a third priority lender.

However, NIC said that it was just a time-buying tactic of Adukiya as it had already written to both Adukiya’s company and NRB stating that Krishi Premura was free to sell the land and repay the loan.

When asked whether they would be able to complete the sale within the extended deadline, he said that it all depends on whether NIC lends support in this regard.

The banks, however, have a different take on the matter. They said that as per the Bank and Financial Institution Act (BAFIA), they have the right to auction off the land if the loans are not repaid. A CEO of the bank extending loans against the collateral said that the central bank has prevented auctioning land they have a right to sell besides stopping them from declaring dividends equivalent to the loan amount as well.

The central bank has, however, allowed these banks not to keep provisioning of the loans that went to Shubham Investment until the set deadline for selling the land expires. Another NRB official said that it was wrong of the central bank to prevent the banks from auctioning off the collateral which would have improved their books.

Posted on: 2012-09-24 08:33

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