Share capital of 25 promoters of troubled Karnali Development Bank cut

The share capital of 25 promoter shareholders of Karnali Development Bank, which Nepal Rastra Bank declared troubled, has been cut to one percent.

The management team formed by Rastra Bank made the decision as part of the bank's restructuring process. Rastra Bank had declared the bank troubled and taken over its management after deposit mismanagement and weak financial governance came to light.

Under the decision, the promoters' roughly 2,136,000 promoter shares have been reduced to about 21,360 units. Their roughly 12,684 ordinary shares have also been cut, to about 126 units.

Taken together, the roughly 2,148,000 promoter and ordinary shares held by the 35 shareholders have now been limited to about 21,487 units. A valuation of assets and liabilities conducted after the troubled declaration showed the bank's assets could not cover its liabilities.

According to the management team, these shareholders had paid in their capital through unlawful means. The management team has already submitted the decision to reduce the share capital to the Office of the Company Registrar for updating.