The central bank has directed the current administrators to submit a plan to hand over control to H&B’s large shareholders when it pulls out.

NRB had taken over the bank’s management on May 29 after suspending the board and the chief executive officer for “failing to comply with its directive”.

Subsequently, the central bank dismissed the suspended board, and its managers at H&B removed the suspended CEO Jasoda Sainju at its direction.

H&B has been under financial stress since a scam broke two years ago when good-for-payment cheques worth more than Rs 800 million were issued illegally with bank staff and two traders working in collusion.

“As NRB’s supervision report and recent probe report prepared by a team of experts assigned by the bank management showed no hand of the promoters in the scandal, we have decided to hand over management to the bank’s key promoters,” said a senior NRB official.

A probe team headed by former chief judge of the Appellate Court Keshav Prasad Mainali had hinted at the involvement of suspended employees in the fraud and showed no direct participation of the chief executive and board members.

Meanwhile, the report blamed the top management and board for failing to ensure an internal control system despite the fact that embezzlement had been taking place since the bank was formed after a merger between Himchuli Development Bank and Birgunj Finance in 2011.

However, the police have arrested Sainju and former director Puspa Jyoti Dhungana based on complaints of a bank customer.

The report has also blamed the failure of the management to integrate the systems of the two merged companies for the scam.

According to the NRB official, they no longer want to extend its management at H&B and have downsized its team to two from three after its coordinator Gyan Krishna Adhikari retired from the central bank a few days ago.

NRB has appointed a member of the management team Deputy Director Bishnu Mani Gautam as the new coordinator and Assistance Director Hem Raj Adhikari as a member. Gautam said that they had started the sequence of handing over management as per the central bank’s directive. The bank has also initiated the process of removing the suspended employees as ordered by the central bank after receiving the probe report.

Gautam said that they had initiated departmental action against them as directed by NRB. Following the scandal, the bank suspended eight employees including the main fraudster Niraj Nepal, then chief of the Kuleshwor branch and Chief Operating Officer Mahesh Bhusal. The bad cheques were issued from the Kuleshwor branch. With the probe report indicating that payment should be made to the holders of the good-for-payment cheques as per the decision of the bank’s annual general meeting (AGM) which approved payment of 60 percent of the claims, the bank has made provisioning of Rs 390 million for possible liabilities. The cheque holders have claimed Rs 810 million.

A number of cheque holders have gone to court demanding payment of the cheques, and H&B has made provisioning amounting to less than 60 percent of the claimed figure. Claims related to court cases have not been included in the provisioning, said a bank source.