VIBOR BANK Crisis Averted

Vibor Development Bank’s management has shown the way by successfully managing a capital crunch crisis<br>A CORRESSPONDENT

June 19, 2011, 5:45 p.m. Published in Magazine Issue: Vol. : 05 No.-1 June 17-2011 (Ashar 03,2068)

Following Nepal Rastra Bank’s decision to provide loans of Rs. 500 million to the Vibor Development Bank, the crisis of liquidity crunch was avoided in for now.


After Nepal Rastra Bank pulled out its fixed deposit of Rs 260 million, followed by Nepal Army’s Rs 50 million, Vibor dived into an acute liquidity shortage. Nepal Army had taken loans of Rs 50 million against its deposit in the bank.


The Bank was gripped by liquidity crisis due to the withdrawal of big amounts by the institutional depositors.


According to central bank spokesperson Bhaskarmani Gyawali, there are no other problems except liquidity crisis in the Vibor Bank. The loan was provided under the loan facility, said Gyawali.


Chief Executive officer of Vibor Development Bank Ajay Ghimire said the crisis is over following Nepal Rastra Bank’s decision to provide loan to us. Despite good credit to deposit ratio of 58.09 percent, the bank has struggled to manage liquidity.


Addressing a pres conference, Ghimire said, “The problem at Vibor is purely a liquidity one, not systemic risk. We’ve asked the central bank to ease the liquidity problem. We hope that the crisis crunch will be settled following Nepal Rastra Bank’s decision to provide the loan.”


The bank has collected Rs. 3 billion in deposits and invested 2.20 billion rupees. “There need not be any panic for the depositors since we are in the profit even after our expenditure and investment”


The Bank has now 100 million rupees deposit of Nagrik Lagani Kosh and remaining deposits are of small depositors. At the press conference, chief executive officer Ghimire said that they have already sold 150 out of 160 land plots in Bungmati.


“I will not take any facilities till the improvement of bank’s financial system,” declared Ghimire.


According to Ghimire, the bank was struggling to manage liquidity position for a few weeks and had taken refinancing facility from the central bank. “After the Nepal Share Market episode, we’d taken refinancing facility from the central bank and were in a recovery mode,” said Ghimire.


The timely action of Management of Vibor Development Bank saved it from heading to a crisis.

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