Bottlenecks in auction process making cash flow difficult; cash collected in auction process being held for long

News about liquidity crunch in Nepalese banking system is all-pervasive these days. In such a circumstance, one can imagine the situation in which Rs 4 arba cash lying idle without being circulated with a couple of institutions at a time when interest rates are in historical upward spiral. Bank of Kathmandu Limited (BOKL) had recently offered its promoter shares for auction for which Nabil Investment Banking Limited had opened application from Mangsir 22 to Mangsir 29, 2074. The issue manager opened the bid of 61.58 lakh unit shares on Poush 5 and only some 6 individuals and organizations managed to get hold of its promoter shares. After some 2 weeks that the bid was opened, the board meeting of Bank of Kathmandu endorsed the auction yesterday and the shares were officially allotted. The auction had seen a collection of Rs 4 arba of cash, applications from 961 interested bidders; a majority of whom could neither get the BOKLPO shares in auction nor get back their deposit of more than Rs 3 arba for more than two weeks. The non-allottees are getting their money back from today which might still take some time as there are other issues that could further delay the process of complete disbursement of some Rs 3 arba of cash to more than 900 non-allotted parties. But the question is not just how long the recipients will have to wait before receiving back their cash but the serious question is why hasn’t the public seen any role from regulating bodies in easing the problems of this kind even at the time when the industry is reeling under the severe crunch of cash. It has almost been 15 days that the bid was opened where only a handful number of people and organizations managed to grab the shares while the big chunk of investors has been forced to face the brunt of cash crunch due to the many bottlenecks the entire auction process has. One such bottleneck being poor monitoring from the regulator body (SEBON in this case) to ramp up the parties involved in the auction process to speed the process of bid opening and final endorsement from the board. It is a known fact to everyone that the interest rates that the commercial banks offer to their depositors these days have been jacked up to even more than 12% whereas Rs 4 arba cash remained out of the supply channel that too without a single penny interest. According to an official from Nabil Investment Banking Limited, “The refund process is being conducted in time as it’s a known practice for the issue managers to start refunding the cash of non-allottees within 3-4 days of allotment. The board of Bank of Kathmandu had endorsed the allotment decision yesterday thereby concluding the allotment and the prompt refunding of the non-allotted money is taking place from today itself”.