18 Chait, Kathmandu. Nepal Rastra Bank is going to make the depositors of the troubled Karnali Development Bank shareholders.

To raise the necessary capital for the re-operation of this bank, the central bank has started the process of making the savers shareholders.

Karnali Bank’s liabilities are about 25 percent more than its assets under the control of the central bank. The Central Bank has come up with a re-operation plan after disbanding the institution and clearing the assets and liabilities.

For that, the Board of Directors of the Central Bank has decided and requested the Nepal Securities Board for facilitation.

The approval of the Securities Board is required regarding the process of making the saver a shareholder. Tikaram Khatiwada, the coordinator of the management committee from Rashtra Bank, said that the necessary decision to take the board’s permission is being discussed.

‘There is a mismatch between deposits and assets in the bank,’ said Khatiwada, ‘now there are 4.3 billion deposits and 3.65 billion assets.’

He said that even if all the assets of the bank are managed, it will not be enough to give to the savers. He also said that the quality of the bank’s loans is also poor.

He says that even after looking at the ‘supervisory haircut’, all the money cannot be given to the depositors. Therefore, he says that the basis for protecting the depositors is the re-operation of the institution. “About 25 percent of the depositors do not get money when the current property is sold,” he said.

He said that the depositors should be made shareholders to return the money of the savers by bringing the institution back into operation. He said that as the capital investment of the organization needs to be increased, he proposed to convert depositors’ money into shares as a new option.

“We are working on two options to deliver the capital specified by the central bank, to issue shares, we are trying to raise capital by arranging that the depositors can take their deposit equal to or less as the depositor wants, during the preliminary survey, the depositors have agreed,” said Khatiwada.

He said that when converted into shares, it will be 100 rupees per share. He said that if the capital set by the National Bank is not enough with the money from the depositors, the shares will be sold to domestic or foreign interested investors.

“We have reduced the shares of the founders and ordinary shareholders involved in embezzlement, we have reduced their share price to 1 rupee, that is, we have reduced the share price of 100 shares to 1 share,” he said. .’

Currently, the share structure of the bank is 51 percent of the institutional side and 49 percent of the general public. He said that after the re-operation, the share structure of the bank will be made up of 60 percent founders and 40 percent general public.

Khatiwada said that they are working according to the Rashtra Bank Act 2058 and while working towards shares, the approval of the Securities Board is required.

Tolakant Neupane, Assistant Spokesperson of the Board, said that the Central Bank is trying to do an exercise which the Securities Board has not done so far and how it can be done.

Discussions are going on between the Board and the Central Bank regarding the conversion of Karnali Development Bank’s depositors into shares, he said, as there is no clear provision in the law, some amendments to the guidelines including the securities registration and issuance regulations may be necessary.