Economy

Banks sell machinery to recover loans

Published by Octron on June 10, 2010

Commercial banks which have invested millions of rupees in various factories have been selling their machinery at scrap value to recover their loans after the promoters fled. More than three dozen large scale industries along the Sunsari-Morang Industrial Corridor have been shut down in the last decade. Banks in Biratnagar have invested over Rs. 4 billion in these industries. Now they have started to sell the equipment and other assets at scrap value to recover their investment.

In the last decade, Ashok Textiles, Shivalaya Metal, Shangrila Apparels, JD Apparels, Star Board, Arun Steel, Star Textile, Ganapati Cotton Mill and others have been closed.

Most of the private banks have invested in machinery while Nepal Bank Limited and Rastriya Banijya Bank financed the land and buildings of these industries.

Nepal SBI Bank that has loaned Rs. 60 million for the machinery of Ashok Textiles Industries has started to sell it to get its money back.

“There was no alternative after the promoters fled,” said Gopal Gadtaula, branch chief of Nepal SBI Bank, Biratnagar. According to Gadtaula, the bank has recovered Rs. 9.1 million so far by selling the machinery of Ashok Textiles.

After the demise of Navaratan Lohia, promoter of Ashok Textiles, his family moved to India.

Likewise, Rastriya Banijya Bank and Nepal Bank Limited have sold the machinery and buildings of Ganapati Cotton Mill to recover their loans. The two banks had issued loans in excess of Rs. 100 million to Ganapati Cotton Mill.

NIC Bank has also recovered some of its money by selling the machinery of Om Jagadamba Textiles. The bank had invested more than Rs. 50 million in the company.

Source: Kantipur, Biratnagar

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