Nepal Rastra Bank (NRB), the central bank of Nepal, has slapped a penal interest against Kathmandu-based Everest Bank Ltd (EBL), a bank co-promoted by Punjab National Bank (PNB), on account of short lending under deprived sector.
The bank also failed in meeting its projections made while floating a Rs 2.89 crore rights issue. Owing to de-recognition of interest in some accounts to the tune of Rs 1.29 crore and additional provisions, over and above normal provision in some accounts, EBL could not achieve its targets.
EBL floated a rights issue in 2000-01, whereby the bank issued 12,00,000 shares of Rs 100 each (Nepali rupiya).
EBL has failed to meet its obligation for minimum lending targets fixed by the NRB for three consecutive years till 2000-01. Consequent to this, the Nepal apex bank has levied penal interests.
NRB levied interest of Rs 2.79 lakh, Rs 18,000, and Rs 21,000 for the years 2000-01, 1999-00 and 1998-99, respectively. According to PNB, EBL has subsequently made up the shortfall.
PNB Gilts, another subsidiary of PNB which made an initial public offering in July 2000, also failed to meet financial projections for 2000-01. The company has projected a profit before tax of Rs 139.91 crore for the year. The actuals were short by Rs 59.22 crore.
Unfavourable market conditions in the first half of 2001 resulted in a loss of Rs 39.16 crore. The company, however, made a profit before tax of Rs 119.85 crore in the second half of 2000-01 ending the year with a profit before tax of Rs 80.69 crore for the year. The company expected a Rs 195 crore interest income from government securities, and Rs 22.5 crore from public sector undertaking bonds.
The Reserve Bank of India had earlier asked Punjab ational Bank to take steps to close down PNB Caps, a 100 per cent subsidiary, in view of the lack of clarity on sustainability of non-fund based business, and has also not acceded to the bank
