April 12: Gurkhas Finance has started its operations. The finance company formed by the merger between Gurkha Development Bank and Kathmandu Finance begun its integrated transactions on April 10. The ‘B’ level Gurkha Development bank has become ‘C’ level after the merger. This is for the first time in the country that a financial institution has been downgraded after merger.

Gurkha Development Bank was declared troubled by Nepal Rastriya Bank (NRB) on March 25, 2011. The huge fund embezzled by the then directors of the bank including DB Bamjan, Rakesh Adukiya and Nirmal Gurung cause the bank to fall in trouble. With no improvement two years after the declaring it troubled, NRB took over the management of the bank on 2012.

NRB appointed Mukti Nath Sapkota and Ganesh Kumar Rai to take the responsibility of the bank in the leadership of Bishnu Thapa. However, Thapa was called back and the management leadership was handed to Mukti Nath Sapkota. For the improvement of the bank’s financial health, the NRB team collected bad debts and started the merger process. As per the clause 37 of the Bank and Financial Institution Act (Bafia), NRB downgraded the Gorkha Development Bank by one level.

The new entity formed after the merger has a paid-up capital of Rs 570 million. Likewise, its deposits stand at Rs 1.93 billion while its loans totaled Rs 2.6 billion. The bank has 10 branches and 44,000 customers.

Meanwhile, the NRB has hand over the management of Gurkhas Finance to the related board of directors. Stating that the company has returned to normal position, NRB has separated itself from the management responsibility.

After the merger, Mahendra Lal Rai has become the Chairman of the company, whereas Meharman Lingden, Birendra Bikram Limbu, Prem Bahadur Gurung and Tek Bahadur Gurung are its board members. Raj Kumar Rai has been appointed the CEO of the finance.