People's Finance chief executive faked accounts

People’s Finance executive chairperson Chhabilal Bhusal has been involved in financial misappropriation creating fake borrowers, according to the finance company sources.
“There are around a dozen fake borrowers,” the source said, suspecting that the executive chairman, himself, has taken loans in the name of fake borrowers.
The chairman, however didnot turn today as promised but faxed his deputy Keshab Prasad Bhattarai telling him
to run operations of the finance company until he returns as he has become ill.
However, a three-member team from the central bank has been investigating the finance company’s accounts since yesterday to get clear picture of the company’s assets and liabilities.
Today, the second day also the finance company remained closed.
The central bank has taken back its Rs 70 million deposit after its maturity leading the company to liquidity crunch, said the source.
However, according to the central bank, the financial institutions are heavily dependent on institutional deposits and mismatch between lending and deposit has become a major threat to many of them recently.
The financial institutions should be aware of their asset-liability mismatch to avert crisis like this, the source said, adding that they should not compromise with prudential norms of banking and follow central banks directives to remain a financially healthy institutions.
“The cut-throat competition among the financial institutions, aggressive lending and over ambitious profit target coupled with over exposure to land and real estate would lead any of the financial institutions to this situation.”
“Had the finance company followed central bank’s directives, the situation could have been averted,” he added. “The Class C finance company established in 2049 BS was heavily exposed to land and real estate as its loan exposure to the sector is around 60 per cent apart from its chairman’s faking the accounts.”
Meanwhile, Nepal Finance Company Association today requested the central bank to take the case seriously and help run the finance company as it could send a negative message to the people, who are already doubtful of the financial institutions lately.
“The central bank is positive on sorting the issue out to boost depositors confidence on financial institutions,” said Nepal Finance Company Association president Nepal Rajendra Man Shakya.
People’s Finance yesterday requested Nepal Rastra Bank to let it close daily transaction due to liquidity crunch.
According to the finance company, there is still a possibility of rescuing the finance company, if central bank could refinance it against its good loan.
Similarly, Nepal Stock Exchange (Nepse) has also suspended trading of People’s Finance from today.
In the last three months the company’s 50-unit of share changed hands through five transactions at the highest price of Rs 225 and lowest of Rs 209 per unit share. According to its unaudited results, its earning per share (EPS) stood at Rs 2.25.