Failure of Nepal Development Bank Ltd.
Chapter I
Introduction
1. Background 1. 1. History
Nepal Development Bank Limited (NDBL) was established under the Company Act, 2053(1997) in Chaitra 6, 2054 (March 19, 1998). It was the first national level development bank established by the private sector in Nepal. It had commenced its operation since Magh 17, 2055(January 31, 1999) as per Development Bank Act, 2052 (1996). Since Baisakh 21, 2063(May 4, 2006), it had imparted its services in accordance with Bank and Financial Institution Act, 2063. It had entered into the subscription and services agreement with Industrial Development Bank of India Ltd. (IDBI), the most leading development bank of India on 7th July 2003. It had been honored with ADFIAP (Association of Development Financing Institution in Asia and the Pacific and foreign countries) Development Awards 2004 Infrastructure Development Category for its significant contribution towards infrastructure development in the country. The main objective of NDBL was to cater the demand of medium and long term finance for the industrial, commercial, agricultural, tourism, infrastructure sectors and other services by offering various banking facilities. It mobilized its sources in the form of fixed, saving and other short-term deposits with competitive interest rates.
1.2. Bank Failure:
Bank (depository institutions) failures are widely perceived to have greater adverse effects on the economy and thus are considered more important than the failure of other types of business firms. In part, bank failures are viewed to be more damaging than other failures because of a fear that they may spread in domino fashion throughout the banking system, felling solvent as well as insolvent banks. Thus, the failure of an individual bank introduces the possibility of system wide failures. This perception is widespread. It appears to exist in almost every country at almost every point in time regardless of the existing economic or political structure. As
Introduction
1. Background 1. 1. History
Nepal Development Bank Limited (NDBL) was established under the Company Act, 2053(1997) in Chaitra 6, 2054 (March 19, 1998). It was the first national level development bank established by the private sector in Nepal. It had commenced its operation since Magh 17, 2055(January 31, 1999) as per Development Bank Act, 2052 (1996). Since Baisakh 21, 2063(May 4, 2006), it had imparted its services in accordance with Bank and Financial Institution Act, 2063. It had entered into the subscription and services agreement with Industrial Development Bank of India Ltd. (IDBI), the most leading development bank of India on 7th July 2003. It had been honored with ADFIAP (Association of Development Financing Institution in Asia and the Pacific and foreign countries) Development Awards 2004 Infrastructure Development Category for its significant contribution towards infrastructure development in the country. The main objective of NDBL was to cater the demand of medium and long term finance for the industrial, commercial, agricultural, tourism, infrastructure sectors and other services by offering various banking facilities. It mobilized its sources in the form of fixed, saving and other short-term deposits with competitive interest rates.
1.2. Bank Failure:
Bank (depository institutions) failures are widely perceived to have greater adverse effects on the economy and thus are considered more important than the failure of other types of business firms. In part, bank failures are viewed to be more damaging than other failures because of a fear that they may spread in domino fashion throughout the banking system, felling solvent as well as insolvent banks. Thus, the failure of an individual bank introduces the possibility of system wide failures. This perception is widespread. It appears to exist in almost every country at almost every point in time regardless of the existing economic or political structure. As
References: * archives.myrepublica.com * www.nepalsharemarket.com * sapkotac.blogspot.com