KATHMANDU, 05 NOVÂ 2014 – The Nepal Rastra Bank (NRB) board has decided to send crisis-ridden Himalaya Finance and Crystal Finance to liquidation, stating the financial institutions are not in a position come back into operation.
An NRB source said promoters of both finance companies have been found to have embezzled funds. The source said Himalaya has huge loan exposure to the real estate sector, besides a big amount of deposits to pay back to depositors. â€œThe deposit and asset gap is huge,â€ said the source. â€œBut, Crystal does not have much liability towards depositors.â€
The central bank will now apply to the Lalitpur Appellate Court for the liquidation. The central bank had declared Crystal crisis-ridden in September 2012 and Himalaya in January 2013.Â The NRB official said it had to liquidate the finance companies as both failed to comply with the central bankâ€™s directive to improve their financial situation. The official said Crystal depositors are likely to get back their deposit as the company has insured individual deposits up to Rs 200,000 with Deposit and Credit Guarantee Corporation.
Crystal was declared crisis-ridden after it provided loans worth Rs 4.45 million to its promoters. Himalaya landed in trouble as a result of heavy lending in the real estate sector.