PAC forms panel over variation anomaly

Kathmandu, February 6:

Hot on the heels of a report on Wednesday on the front page of The Himalayan Times, the Public Accounts Committee (PAC) of the parliament yesterday formed a four-member team including PAC secretary Som Bahadur Thapa and an auditor from the Auditor General’s office to look into glaring discrepancies in the audited and unaudited financial statements of commercial banks.

The Himalayan Times report was based on the variation analysis of audited and

unaudited reports of commercial banks.

According to the fiscal year 2006-07 fourth quarter’s report on variation analysis of net profit in the unaudited reports of 19 commercial banks prepared by the Securities

Research Centre and Services (SRCS), one bank had a variation of up to 100 per cent while another had 33.49 per cent variation.

However, reputed banks like Nabil Bank, Nepal Investment Bank Ltd (NIBL), Standard Chartered Bank Nepal (SCNBL), Everest Bank, Lumbini Bank, Laxmi Bank and NMB Bank had less than one per cent variation, which was negligible.

Banking is a growing and robust sector that is seeing tremendous growth over the last decade. However, the report shows that some institutions need to be closely monitored for continuous growth of this sector.

A scrutiny of audited and unaudited reports of the 19 commercial banks showed that the highest variation was 100.47 per cent and the lowest 0.02 per cent. Last year, the highest variation between the unaudited and audited reports was 31.52 per cent. Among listed commercial banks, the highest variation in fiscal year 2007-08 was 33.49 per cent while among the not-listed ones it was 100.47 per cent.

The report shows that Nepal Rastra Bank needs to intensify its monitoring and supervision as the number of financial institutions is growing.

Among those with clean balance sheets, Nepal Investment Bank has a variation of 0.24 per cent and Nabil Bank has a 0.51 per cent variation. SCNBL has 0.56 per cent variation and Everest Bank has a 0.24 per cent variation followed by Laxmi Bank with a 0.60 per cent variation that is negligible.

Himalayan Bank and Bank of Kathmandu have 2.83 per cent and 2.63 per cent variation, respectively, and NIC Bank has a variation of 2.36 per cent in its audited and unaudited reports.

NCC Bank’s loss had increased to Rs 11.24 million or 10.74 per cent in the fiscal year’s report but this year it has a variation of only 0.64 per cent. However, Lumbini Bank in the 2006-07 report had the highest variation — 31.52 per cent or Rs 71.18 million difference between its unaudited and audited reports. In 2007-08, the bank had a minimal difference of 0.32 per cent.